The amount of mortgage lending to UK homebuyers jumped by 12 per cent in the year to September as rising employment and earnings growth helped keep confidence levels high.
Gross mortgage lending reached £20bn in September, up from £17.8bn the same time last year and two per cent higher than August’s lending total of £19.7bn, according to figures from the Council of Mortgage Lenders (CML).
CML economist Mohammad Jamei said the rise marked the fourth month in a row that there has been a sharp improvement in year-on-year lending.
This has helped fuel an 18 per cent rise in gross lending for the third quarter overall to £61.4bn, which was an increase of 12 per cent the same time last year, when lending totalled £55bn.
Jamei said: “Mortgage lending is currently enjoying its best spell since 2008. As we expected, the second half of 2015 has seen a pick-up in activity in the housing market after a slow start to the year. Low inflation, strong wage growth, falling unemployment and competitive mortgage deals are all helping to support housing demand.
We expect to see further modest growth towards the end of the year, although affordability pressures are likely to limit gains for home movers and first-time buyers.”
The positive lending figures come after recent data from the Bank of England shows that mortgage approvals for house purchases reached a 19-month high in August.
Sales activity has also continued to increase, with the Royal Institute of Chartered Surveyors’ September survey showing that agreed sales rose at their fastest rate since May 2014. The RICS survey also showed that buyer enquiries rose for a sixth successive month in September.
Richard Sexton, director of e.surv chartered surveyors, said: “A wave of competition between lenders has delivered buyers and existing owners more mortgage options – and ultimately more opportunity to source the best deals.
“Remortgaging is a major factor, as households pick up on the monthly savings from shifting to the new normal of mortgage rates, but those joining the ladder are also a real driver behind this progress.