Mortgage lending is expected to increase this year for the first time since the credit crunch struck, a trade body predicted today.

The Council of Mortgage Lenders (CML) has raised its forecast for net lending the amount lent minus repayments by 50% from just 6 billion in 2010 to 9 billion for 2011, increasing to 12 billion in 2012 as the recovery continues.

But mortgages will still be very hard to get, it warns, especially when you consider the figures are still well down on the 108 billion of net lending in 2007.

Consumers need a virtually spotless credit rating to get a home loan as well as generally needing a deposit worth 10% of the property value, or 25% to get a decent rate. On a typical 200,000 home, that's a 20,000 or 50,000 down payment.

The CML says that although the availability of credit to back mortgage lending remains constrained, conditions have eased a little.

Lenders cautious

Total advances are also expected to be higher than previously thought at 140 billion, compared with a predicted 135 billion, while they should rise to 150 billion next year.

The group also warns that conservative lending practices are being entrenched by the Financial Services Authority's mortgage market review, which calls for tighter checks on borrowers' ability to repay.

Property transactions are likely to remain subdued as household confidence remains low in the face of falling incomes in real terms, the CML adds.

It expects just 840,000 homes to change hands this year, down on both last year's figure and its previous forecast, and the lowest level since records began in 2000.

It says lenders had reported weak demand for housing for several quarters, and this is expected to continue.

Despite the pressures on household incomes, the CML has not increased its forecasts for arrears and repossessions, as it expects the bank of England base rate to remain at its current record low of 0.5% for most of 2011, which is leading to lower monthly repayments.

But, at 40,000, the number of people who are expected to lose their home this year is still higher than the 36,300 properties seized in 2010, and the figure is expected to climb further to 45,000 next year, although this is still below 2009 levels which stood at 46,000.