LONDON (Reuters) - Lending activity has picked up in the housing market, with more financing becoming available for higher loan-to-value transactions, Treasury minister Paul Myners said on Tuesday.

"There is an increase in the lending activity," Myners told parliament's Treasury Committee, citing data from the Bank of England.

"There is more available finance and there's a trend towards more products being offered at the higher loan to value areas," he said, although he added that "pockets of the housing market" remained very difficult.

He specifically cited buy-to-let properties in city centre locations as one of the most challenging sectors.

BoE data for May showed mortgage lending rose by its lowest amount on record and home loan approvals were weaker than expected.

However, the bank's quarterly credit conditions survey showed lower funding costs had boosted the availability of secured credit to households in the second quarter -- the first increase since the third quarter of 2007.

"There are other areas in the market which are beginning to find an equilibrium of value. I'm thinking three of the last four months, one of the major property surveys has indicated values increasing," Myners said.

Economic forces would see the return to higher loan value mortgages, Myners said, adding this was the case now for HSBC, one of the major lenders.

Fees levied by lenders in the mortgage market were a concern as there were some "extraordinary charges" Myners said, adding this should be a major focus for the Financial Services Authority (FSA), which plans to start a review in September.