Bank of England (BoE) data showed approvals fell to 74,500 during the month. This was a tick down from July, where approvals totalled 75,100. This was also the lowest level since July last year.
However, approvals still remain above pre-pandemic levels.
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said: “August and September were certainly quieter on the applications front, but it feels busy as I’m fighting cases through with some lenders, who are more cautious than ever, especially with the self-employed.”
Dean Esnard, director at Magni Finance, said the month was “definitely quieter” but expected activity to return.
He added: “September has picked up again although there is not as much intensity as buyers feel there is more room for negotiation now that the market has cooled down. On the remortgage front, borrowers have been keen to switch products to take advantage of record low rates with some even paying a penalty to end their current deal early.”
Remortgage approvals rose to their highest point since last March, totalling 39,700. This was up from 37,441 in July but low when compared to the months before February 2020.
Gross lending recovers
Gross mortgage lending increased to £21.5bn in August, recovering from a low the month before when lending amounted to £16.6bn.
Gross repayments fell from £18.1bn to £17.6bn, a further decline on the £27.8bn recorded in June.
On net, mortgage borrowing reached £5.3bn following a rare net repayment peak of £1.8bn in July. That month was the second time in a decade that repayments exceeded borrowing.
Average interest rates on newly drawn mortgages declined by one basis point to 1.82 per cent in August.
Meanwhile, the rate on the outstanding stock of mortgages stayed at a series low of 2.05 per cent.
John Phillips, national operations director at Just Mortgages, said: “Following on from the rare net repayment in July, mortgage borrowing returned to closer to normal in August as the stamp duty holiday begins to wind down.
“With just a few hours left before stamp duty returns fully, from now we will begin to get a clearer picture of the state of the housing market in the UK. And the outlook is bright. Despite a slight reduction in activity from the huge peaks earlier in the year, there are still plenty of people looking to move.”