The economic backdrop for the housing and mortgage markets remains challenging, but house purchase and remortgage activity both appear to have picked up recently.

Thus, the Council of Mortgage Lenders (CML) estimates that total gross lending recovered to £12.9bn pounds in October, which marks a sharp reversal from last month's fall, to £11.39bn.

Interestingly, the Council indicates that the Funding for Lending Scheme is likely to have made an early positive impact, helping to counter some of the negative pressures associated with a protracted and weak economic recovery, so that the market weakness of recent months may be coming to an end.

Remortgaging activity, in particular, had been very subdued through 2012, but the cumulative effect of increases in standard variable rates (SVRs) by some mortgage firms and more competitive mortgage deals - on the back of better funding conditions - appears to have re-kindled some remortgaging appetite.

As well, says the Council, an important development for the market is that the upward pressure on new mortgage rates - evident during the first half - has shown signs of abating in recent months.

In the case of average rates on fixed rate mortgage products -which represent about two thirds of new mortgage lending- this reflects improvements in European funding conditions more generally and Funding for Lending Scheme (FLS) effects, it says.

In that same vein, the CML cites the latest Royal Institute of Chartered Surveyors' survey data, which reported the strongest reading for house buyer interest in nearly three years, as a possible encouraging sign that household demand -and hence the effectiveness of FLS- is picking up.

Despite all of the above, the trade body indicates that the first FLS metrics - relating to drawdowns under the scheme and net lending flows for the third quarter - will be published on December 3rd, but may not be particularly revealing.

AB

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