Mortgage lenders are reporting that business has surged to its strongest levels since 2008 as a “meaningful recovery” in the UK housing market continues.

An estimated £15 billion worth of mortgages was advanced in June, marking the best month seen since October 2008, the Council of Mortgage Lenders (CML) said.

About £42 billion worth of deals were handed out between April and June, which is also the highest quarterly estimate seen since the last three months of 2008.

Mortgage lending last month was about two per cent higher than May and up by one quarter (26 per cent) compared with same month a year ago.

CML chief economist Bob Pannell said the signs of improvement in the housing market look “set to continue for the immediate future”.

He said: “Improvements in the cost and availability of mortgage credit are underpinning a meaningful recovery in the housing market.

“In recent months, we have seen the strongest performance for mortgage lending since 2008.”

Last week the CML reported that first-time buyer numbers had lifted to their highest levels in five-and-a-half years amid better access to mortgages. People taking their first step on the property ladder are also needing to put lower deposits down, as lenders’ “risk appetite” returns.

Banks, building societies, estate agents and property websites have all been reporting signs of more bustling activity in recent months as confidence blossoms.

The strength of the recent upswing has taken several experts by surprise and some have revised their predictions for house price rises over 2013 upwards.

Property search website Rightmove said earlier last week that house sellers’ asking prices scored a hat-trick of record highs in May, June, and July this year, and other studies have shown that sellers are feeling more confident about sticking close to their asking prices as more would-be buyers enter the market.

Rightmove now expects to see a four per cent increase in house prices over the course of 2013, instead of a two per cent rise penciled in at the start of the year.

The strength of the recent upswing has taken several experts by surprise

Much of the recent housing market lift has been put down to wider access to mortgages and lenders competing harder to offer cheaper and more innovative deals, following the launch of a government scheme called Funding for Lending last year, which gives lenders access to cheap finance to help borrowers.

The average five-year fixed-rate deal has now fallen below four per cent across the entire mortgage market, to an all-time low of 3.87 per cent, according to financial information website Moneyfacts.

Initiatives such as New Buy and Help to Buy have also been introduced to give a helping hand to people with smaller mortgage deposits.

Mr Pannell cautioned that despite the recent upturn in first-time buyer numbers, activity is still at “barely half” the rates it was a decade ago and remains below “what might be considered normal levels”.

But the Bank of England’s latest trends in lending report confirmed that small business borrowing continues to fall despite the Funding for Lending scheme (FLS).

Figures – first published in its money and credit report earlier this month – show that net lending to small and medium-sized firms (SMEs) slumped by £3.8 billion in May – far worse than the £1.3 billion decline in April and the worst result for more than a year.

Overall, small business net lending fell by £4.5 billion in the three months to May, which the Bank said was broadly similar to the decline seen in the previous quarter.

It said borrowing costs were “little changed” for small firms, although lending was now cheaper for large businesses.

Growth among small firms is seen as vital to the wider economic recovery, with the SME sector accounting for about 60 per cent of private sector employment and half the annual turnover of all private sector businesses.

The government has been seeking to increase the availability of loans to the sector, tweaking the FLS in April to make it even more attractive for lenders to offer credit to SMEs.

Under the reforms, banks were offered an up to 10-fold increase in the low-interest funding they can access in return for extending loans to smaller businesses.

The FLS has also been opened up to non-bank lenders, such as invoice finance houses and leasing firms that provide about £20 billion of working capital to small firms.

But the Bank said demand for credit among small firms remained “subdued” as many prefer instead to pay down existing debt or build up cash reserves.