By Max Clarke

Gross mortgage lending surged 21% from £9.3 billion in February, renewing hope in the UK’s housing market which in itself serves as a barometer for the wider UK economy.

The news follows last month’s shock 26% drop in mortgage lending owing to an ‘unusual combination of factors’.

“The housing market has emerged hesitantly from hibernation,” commented Council of Mortgage Lenders’ chief economist, Bob Pannell. “Household finances are under a lot of pressure, and as a result demand for house purchase loans fell in the first three months of 2011. Lenders expect mortgage credit availability to improve this quarter, and this should help to underpin house purchase activity albeit at pretty low levels.

Pannell continued: “Remortgage demand, meanwhile, continues to firm, presumably linked to expectations of higher base rates. Remortgage approvals in February were the highest for more than two years. Stronger remortgage activity looks set to continue propping up overall lending.”