Gross mortgage lending increased by 4.3% to an estimated £28.1 billion in September, up from £26.9 billion in August according to the latest data from the Council of Mortgage Lenders.
This figure is one of the highest monthly lending figures on record, and 11% more than the £25.3 billion of lending in September 2004.
Since the beginning of the year we have witnessed a relatively steady recovery in mortgage lending activity and until recently this had mainly reflected seasonal factors. While we continue to believe that the housing market is on course for a "soft landing" from the exceptional highs of 2003/04, recent months have seen strong growth in mortgage lending, boosted by high levels of remortgaging as people take advantage of lower interest rates and switch onto cheaper deals.
The Bank of England's mortgage approval figures also reflect the resilience of the housing market in the past few months. In August 107,000 mortgages were approved - the highest figure since the 110,000 of mortgage approvals in June 2004. Buyers appear to have become more confident that current house prices are sustainable. The fact that interest rates seem to have peaked and look unlikely to rise sharply in the near future may also have helped reduce concerns about affordability.
Commenting on today's figures, CML Director General Michael Coogan said:
"Our latest data provides evidence that the housing market is in relatively good health, and households are not lacking confidence to take on mortgages.
"While expectations of lower interest rates have undoubtedly helped to trigger the recent resurgence in lending, we believe the Bank of England's Monetary Policy Committee will put off cutting rates further until it is clear that inflationary pressures are easing. We would correspondingly expect lending activity to level off over the coming months."
