Gross mortgage lending last month hit a nine year high for the month of September, despite a 7% month-on-month drop, new figures from the Council of Mortgage Lenders (CML) show.
The CML estimates that gross mortgage lending reached £20.5bn in September, down from the £22.1bn recorded in August but 2% higher than the £20.1bn lent in the corresponding month last year.
Last month’s total gross mortgage lending marked the highest September figure since 2007 when gross lending reached £29.9bn.
CML’s latest figures also reveal that gross mortgage lending for Q3 2016 was estimated at £63.6bn, up 11% on Q2 this year, and 4% higher than the third quarter of 2015.
CML senior economist Mohammad Jamei said: “Remortgage activity looks set to grow, helped by attractively priced mortgage deals encouraging borrowers to refinance. Prospects for house purchase activity continue to look slightly subdued, when compared to the same period a year ago.
“Despite this, housing market sentiment continued to improve in September, after recovering in August. As a result, we expect a modest rise in approvals, though at levels lower than seen earlier this year, as the lack of properties on the market for sale and affordability constraints continue to bear down on borrowers.”
Henry Woodcock, principal mortgage consultant at IRESS notes that the gross mortgages lending trend since the summer has been in an upward trajectory, and so is surprised to see that the market stumbled last month compared with August.
He commented: “In spite of the fact that positive movements in the market all pointed to a continued recovery from the post-referendum and summer lull, borrower sentiment has not matched market expectations. However, I think this is just a blip.
“The total number of mortgage products has increased over the last 19 months to an eye watering 24,415, pointing to fierce competition. House prices fell by 0.5% in Q3 2016, the first quarterly decline seen in four years according to Halifax’s House Price Index which - combined with the August base rate cut – may still tempt borrowers to remortgage or move house.
“The impending closure of Help to Buy at the end of the year will also likely see a last minute rush by low deposit borrowers to secure those attractive deals.
“No doubt we’ll see lower numbers as we head into the mid-winter seasonal slowdown in activity, however the signs for October still look pretty positive.”