The Council of Mortgage Lenders in UK announced a 10% increase in gross mortgage lending last August, the highest since July of 2009. With last year’s record as a basis of comparison, figures also revealed a 6% drop last July.

While mortgage lending activities proved to be bleak in July, the unexpected growth surge in August was strong enough to offset the previous month’s performance. CML Chief Economist Bob Pannell states that the July figure was “weaker than expected”.

Pannell further adds that the months of July and August in the years 2009 and 2010 do not show drastic changes. This means that performance levels of the mortgage lending industry have been rather stable in the past 3 years. Sensitivity to global economic trends explains the random dip, particularly in mortgage lending.

Investors have been wary in parting with their money in the wake of the recent economic crisis. Meanwhile, potential buyers are threatened by the loss of employment, which has resulted to a wait-and-see approach.

Because of this hesitation, lending firms have no choice but to amend borrowing regulations including the extension of loan periods up to 5 or 10 years and lowering interest rates. Aaron Strutt of the Trinity Financial Group said that the market has seen “much needed innovation”.

Long-term fixes can provide the answers for those who seek financial stability as well as for those who are buying a house for permanent residency. Strutt believes that in a few years, those who have not availed of the current low rates might hope they had. In the same way, a homeowner may have wished he had done a quick house sale before the house prices fell.

On the other hand, borrowers might experience difficulty if the intent is just to move to another home, as they will be asked to prove their income again. The worst-case scenario for borrowers would be losing employment or shutting down business – they will be left with no option but to stick the mortgage out.

"Banks and building societies are trying to increase demand for their services and mortgages continue to get slightly lower every few days - but we have seen rates increase quickly in the past and they will not stay this low for ever," he said. Now is the time to make a purchase.

While it came as a relief for the economy , the improved performance of the mortgage industry in August should not be taken as a permanent change. Mortgage Advice Bureau Head Brian Murphy said that to call it a bounce would be flattering. Murphy further states that the demand for mortgage lending because of low rates is partly responsible for the industry’s growth.

Hopefully this will still give homeowners struggling to pay their monthly mortgage repayments some breathing space and prevent many worried homeowners already in arrears to fall further behind and or worse sell their house quickly if they can't keep up with the mortgage payments.