Gross lending for house purchases is slowly recovering in the United Kingdom due in part to rising mortgage approvals, but refinance activity remains subdued, leaving the overall mortgage lending volume at early 1990s-levels throughout June and July, according to Bank of England research. The news comes as a Morgan Stanley (MS) financial adviser survey showed investors are returning to the structured product market, including mortgage-backed securities. New mortgage origination volume was about £5bn ($8.25bn), more than half of total mortgage business in the month, according to Bank of England research. Gross lending has spurred overall mortgage volume to consistently increase since reaching a 17-month low in May, but refinancing volume has remained stable during that period. While on an upswing, the July volume is still lower than it’s March through January 2008 level. “UK lenders reported an improvement in their ability to convert mortgage applications into mortgage completions, consistent with housing market chains becoming less fragile,” Bank of England said in the report. “Demand for remortgaging [refinancing] remains very weak, though some major UK lenders reported tentative signs of their existing borrowers seeking to move off standard-variable-rate mortgages on to fixed-rate products.” As new mortgage business increases, 76% of financial advisors that participated in a Morgan Stanley survey rank structured products as their preferred investment type they recommend to clients. It’s a 21% increase in adviser sentiment from a December 2008 survey, when structured products ranks third behind bonds and mutual funds. The survey also reported 45% of advisers are more inclined to recommend structured products in the past six months, compared to 40% in December 2008, indicating the demand for structured products is expected to remain strong, Morgan Stanley said in a release. “The survey results indicate a much bigger appetite than we expected among financial advisers for structured products and are also extremely encouraging news for providers. Based on the demand for products with a good balance of capital protection and participation, backed by issuers with a good credit rating, Morgan Stanley will continue to offer a range of carefully-designed products to meet these requirements,” Morgan Stanley executive director Marc Chamberlain said in a statement. Write to Austin Kilgore.