Optimism grows for mortgage market Market analysts will be scrutinising a key report on lending on Thursday as optimism grows that measures to break the logjam in mortgage markets are beginning to show signs of success. Lending groups and estate agents are already hopeful that house sales and mortgage lending will rise in 2013, citing the impact of the Bank of England's Funding for Lending scheme. Thursday's credit conditions survey from the Bank of England, covering the last quarter of 2012, should however throw more light on whether this optimism is well placed. The BoE's previous report for the three months to September showed the largest increase in mortgage availability since the survey began in 2007. There are signs that the FLS, which aims to lower banks" funding costs and improve lending to households and small businesses, has already made it easier for some homeowners to borrow. Last year mortgage rates fell to historic lows, with some borrowers able to fix for five years at 2.79 per cent. While most of the recent rate cuts were initially reserved for those with big deposits, reductions are now being passed to borrowers with smaller amounts. These lower rates helped boost activity towards the end of 2012, resulting in the upwards revision of forecasts from the Council of Mortgage Lenders, the trade body for lenders. The CML now expects the gross total lent for 2012 to reach £144bn, up from its original forecast of £133bn. For 2013 it sees a further increase to £156bn as the FLS starts to have an impact. Its optimism echoes forecasts from the Royal Institution of Chartered Surveyors, which says the number of homes bought in the UK will climb by just over 3 per cent to 960,000 this year - the highest level since the market crashed in 2007. "We are going into the new year with a lot more opportunities in the mortgage market than there was at the end of 2011," said David Hollingworth, of mortgage broker London & Country. At the end of 2011, mortgage rates were being pushed upwards as problems in the eurozone deepened, raising the cost of wholesale funding for banks. However, while mortgage lending is expected to edge up this year, experts say the market will remain difficult for many as lenders are unlikely to alter significantly their strict lending terms. The situation for so-called mortgage prisoners - borrowers who cannot move home or remortgage because of lenders" tighter criteria - could worsen further, particularly for homeowners with interest-only loans. Banks and building societies have been pulling back from interest-only deals in recent years as part of the Financial Services Authority's clampdown on irresponsible lending. At the peak of the market in 2007, one in three new loans were sold on an interest-only basis. They now account for more than 40 per cent of the UK's total mortgage book. Over the past six months, several big high-street lenders, including Royal Bank of Scotland, Nationwide and the Co-operative Bank, have stopped offering interest-only loans, reducing the options for those looking to remortgage. Martin Wheatley, the incoming head of the Financial Conduct Authority, last year warned of the "ticking time-bomb" of interest-only borrowers in their 50s who had no way to repay the capital. The FSA is currently assessing the scale of the problem, with a report due early this year. House prices in England and Wales rose for the first time since the summer in November, according to Land Registry figures published on Wednesday, writes Claire Jones. Prices rose by 0.3 per cent after two successive months of declines with the price of the average home in England and Wales reaching £161,490, almost 1 per cent higher than November 2011. Property prices in the northeast, one of the regions worst hit by the economic slowdown, performed the best, rising by 2.4 per cent between October and November. Homeowners in Wales were the hardest hit, with the average property price falling by 1.6 per cent to £115,202. London prices continued to outperform the national average, rising by 0.5 per cent. Over the past year, property prices in the capital have risen by almost 6 per cent - more than double the increase elsewhere. The latest data for the number of properties sold, covering September, when prices fell by 0.3 per cent, were more than a fifth lower than the previous year. Sales of 50,517 properties were recorded in September 2012, against 63,552 for the same month in 2011.