The housing market should pick up as this year progresses, says the trade body for mortgage lenders, while revealing that gross mortgage lending remained stable in July.

July’s gross mortgage lending rate was £21.4bn which closely matched that of June’s (£21.5bn), the Council of Mortgage Lenders said.

CML’s chief economist Bob Pannell said: “The Bank of England expects stronger economic headwinds to build as we move into 2017.

“The Term Funding Scheme should boost market sentiment a little, by engineering broader cuts to rates for existing mortgage borrowers than would have been the case.”

Through the fund the Bank of England will lend up to £100bn to banks at a generous rate to encourage them to pass on this month’s interest rate cut to 0.25% to companies and households.

This July’s gross mortgage lending was 1% lower than in the same month last year (£21.6bn).

Pannell said market conditions would become clearer as it moved further away from the “distorting effects of April’s Stamp Duty change”.

Chancellor George Osborne announced in March’s Budget that buy-to-let investors would pay an extra 3% Stamp Duty charges from April, which led to a rush of people trying to buy properties before the tax increases came in.

Pannell added: “It is not clear how well the Bank’s actions will underpin borrower demand in a more adverse economic climate.

“The subdued nature of property transactions and mortgage lending in July are consistent with a less positive backdrop for house purchase activity post-referendum.”

Paul Smith, the chief executive of Haart estate agents, said: “Now that interest rates have dropped, it won’t be long before things pick up again and house-hunters hungry for their first home will be looking to take advantage.”