The number of mortgage approvals by the main high street banks increased by 0.7% on an annual basis, whilst remortgage approvals rose by 9.2%, according to the latest report released by UK Finance.
House purchases and other secured borrowing dropped by 4.3% and 2.1% respectively.
Peter Tyler, director at UK Finance, said: “Remortgaging continued to dominate in August, as homeowners took advantage of a competitive market to lock into attractive deals.
“However, the overall economic outlook remains mixed as household incomes continue to be squeezed by rising inflation.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With many would-be buyers holding off making a decision until Brexit is resolved one way or another, lenders are battling for a relatively small pool of borrowers and are having to reduce rates accordingly.
“Barclays, HSBC, Halifax and TSB are among the big names to have reduced the cost of fixed-rate mortgages recently, and we expect this trend to continue as lenders try to boost business before the end of the year.”
Market remains fairly flat
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that at first glance these figures look encouraging but as a substantial part of the increase in lending is to do with remortgaging in anticipation of higher interest rates, the picture is not so rosy.
He said: “Mortgage approvals for house purchase are lower compared with this time last year, which was not a particularly impressive time anyway. Clearly, the market remains fairly flat without too much movement one way or the other, which is reflected on the high street.
“Confidence is in short supply unless new market conditions are recognised. Having said that, we are seeing more viewings and more realism as the summer period is now behind us. It is now up to sellers to recognise that the market is unlikely to change for the better for some time.”