However, the British Bankers Association (BBA) revealed that, while the rise in gross lending reflected the stronger mortgage approvals of recent months, September mortgage approvals fell across all categories compared to August.
House purchase approvals fell 5.5% in September to 33,130 compared to 35,069 in August. Yet, this was up 8% year-on-year, while the average value of £142,600 was roughly the same as a year earlier.
While remortgage approvals in September were much the same as that seen in 2010, the BBA figures showed that numbers were down 8% on August to 24,498.
Meanwhile, other secured lending approvals totalled 15,014 in September, down around 5% from 15,870 in August.
The relative stability of such approvals reflect the fact homeowners are using the equity value in their homes as security for borrowing, the BBA said.
Its figures also showed that net mortgage lending increased 1.6% year-on-year in September to £0.8bn, ahead of the 0.6% growth in the mortgage market as a whole, and remained steady on the previous month.
BBA statistics director David Dooks said: “Households are limiting their borrowing in the face of unemployment concerns and pressure on household finances amid general economic uncertainty.
“A modest stimulus to gross mortgage lending is coming from the buy-to-let sector as rental yields continue to improve.”
Simon Clark, of mortgage broker Jacobs Payne & Parry Financial Services, said: “There has certainly been a sharp rise in the amount of buy-to-let mortgage activity, as amateur landlords seek to profit from the soaring rentals market. We have seen buy-to-let applications more than double over the past six months.
“The broader stagnation of the mortgage market is in part due to a misperception on behalf of many potential borrowers that they are not mortgageable.
“In fact, many of them will be. We are seeing more and more fringe players, such as the smaller building societies and specialist lenders, compete more on criteria than rate. This manual approach to underwriting is seeing more people secure a loan.”
