August saw the highest gross mortgage lending increase since 2008, with net borrowing experiencing the highest monthly rise since August 2010 to reach £2bn.
The BBA’s figures showed that the number of mortgage approvals in August shot up by 23%, with the prospect of an interest rate rise prompting remortgaging activity to increase by 38% to its highest level for four years. House purchase lending was up by 16%.
High street banks’ mortgage stock increased by 1.4% on last year.
The BBA’s chief economist Richard Woolhouse said more people were putting their money into property while interest rates remained low and the timing of a likely rate rise remained uncertain.
“Mortgage borrowing continues to pick up. The August increase is the largest in five years, although borrowing is still some way below pre-crisis levels,” he added.
“Remortgaging numbers also continue to be strong, as shrewd homeowners snap up competitive deals.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said lending in August had managed to defy the seasonal lull that generally occurred during the summer.
“Lenders are keen to lend, resulting in some very competitive mortgage deals. The mortgage market remains over supplied with lenders having more money to lend than there are people looking for home loans. This means criteria will have to loosen and rates will have to remain low to ensure lenders hit their volume targets.
“For many, the main issue is not so much finding a cheap mortgage rate but being able to prove affordability to satisfy the lender and meet tighter criteria post Mortgage Market Review.”
