Gross mortgage lending jumped 5% in July to an estimated £13.6bn, from £12.9bn in June.
However, this is still down 3% from £14bn compared to July 2009, according to CML data.
The figures back up the trade body's prediction that 2010 will see £10bn less lending, at roughly £140bn, against last year.
CML economist Paul Samter, says: "It is difficult to see anything other than a slow market for the rest of this year as underlying activity remains subdued.
"The pick up in late 2009 won't happen this year as home buyers rushed to buy before the end of the first stamp duty holiday. But for most home owners, the situation is not that bleak.
"The vast majority of households continue to pay their mortgages in full every month, and many have benefited from the record low interest rates. This looks set to continue for some time yet. While there are a range of risks to the outlook, low rates will further help most stay on top of their finances," he adds.
Brian Murphy, head of lending at Mortgage Advice Bureau, says notably in July, borrower appetite for variable rate mortgages waned and fixed rates became the overwhelming choice.
"Nationally, we have seen fixed rate mortgages among house purchase customers increase from around 45% in January this year to more than 60% in July. Increasingly, borrowers are aware of the danger of the base rate moving against them and are opting for the safe haven of fixed rate loans," he adds.
"Rising average LTVs, of 71.1% in July, are confirmation of growing competition among lenders and a renewed appetite to lend."
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