The Bank of England’s latest credit conditions survey found that the availability of mortgages had increased in the second quarter of the year with lenders predicting further increases in the next three months.

It said demand for house purchase mortgages had ‘risen significantly’ in the three month period and further increases were expected over the summer. Lenders reported that average loan-to-value ratios had risen, and lenders were planning to increase their lending at 90% LTV in the third quarter, which should benefit first-time buyers.

A separate Bank of England report on housing equity withdrawal – the amount being paid off mortgage balances – remained negative. It suggested that both lower housing market activity and a reduction in remortgaging had contributed to this continued trend.

Mark Dyason of broker Edinburgh Mortgage Advice said:

“If housing equity withdrawal remains in such deeply negative territory for too long then it will naturally impact the economy.

“While caution around debt has been the consumer’s best friend during the past five years, if it carries on too long and the economy suffers it could become their worst enemy.

“With rates and criteria having improved dramatically over the past year, homeowners may wish to review their options. There is an argument for saying that households that are still stuck with excessive unsecured debt should consider remortgaging to pay this down.

“Until recently, many of these people would not have been able to remortgage and now that there’s a chance they would, they may wish to consider it to alleviate their debt.”