Mortgage lending reached £9.5 billion in September, up from £4.4bn in August, said the Bank of England, the highest monthly borrowing figure since June 2021 .

It also found that mortgage approvals for house purchase fell to 72,600 in September from 74,200 in August, but remained above pre-February 2020 levels.

Approvals for remortgaging to a different lender rose slightly to 41,500 in September. This remains low compared to the months running up to February 2020, but is the highest since March 2020.

Karthik Srivats, co-founder of mortgage lender Ahauz, said: “While all the talk in September was about the squeeze on incomes and faltering economic growth, on the mortgage frontline things accelerated back to a gallop.

“It’s likely that the jump in activity was powered in part by a late surge of buyers desperate to complete their purchases before the end of England’s stamp duty holiday.

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“Even though total new borrowing remains below the all-time high seen in summer, the market’s momentum continues to push up average house prices and pile extra pressure on first-time buyers trying to make the sums work.

“With the supply of homes for sale not even close to keeping up with buyer demand, it’s unlikely the market will cool significantly in the months ahead.”

Mortgage interest rates fall

The average interest rate paid on new mortgages fell four basis points to 1.78% in September, below the average rate since March 2020, said the Bank of England.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Hindsight is both perfect, and useless, because it’s only in hindsight that we can see September may have been the ideal moment to remortgage. Fortunately, even if your timing wasn’t perfect, you can still get a great deal.

“The average rate on new mortgages fell again to 1.78% in September. Since then, anticipation of imminent Bank of England rate rises has increased the cost borrowing for banks, and that has started to feed into higher interest rates.

“However, we’re still near the bottom. You can still get a five-year fixed rate mortgage, for 60% of the value of your home, for less than 1%, and a two-year fix for 0.89%, so there are still great deals around for remortgagers looking to lock in a low rate.

“These deals won’t be around forever though. At a time of rising rates, the only way is up for mortgages, so it’s worth remortgaging sooner rather than later. If you’re on a fixed rate deal, but within six months of the end of it, you don’t have to wait: you can apply for a new mortgage, and secure a cheap deal ready for when your current one expires.”