Gross mortgage lending in September saw a reduction of £2bn from August, figures published by the Council of Mortgage Lenders (CML) show.
Estimated lending reached £20.5bn in September, down from August’s total of £22.1bn.
However, the September figures represent a year-on-year increase, and this is the highest figure since 2007 when gross lending reached £29.9 billion.
Mortgage lending for the third quarter of 2016 hit an estimated £63.6 billion.
CML senior economist Mohammad Jamei said:“Remortgage activity looks set to grow, helped by attractively priced mortgage deals encouraging borrowers to refinance. Prospects for house purchase activity continue to look slightly subdued, when compared to the same period a year ago.
“Despite this, housing market sentiment continued to improve in September, after recovering in August. As a result, we expect a modest rise in approvals, though at levels lower than seen earlier this year, as the lack of properties on the market for sale and affordability constraints continue to bear down on borrowers.”
Responding to the CML figures, Henry Woodcock, principal mortgage consultant at IRESS, said: “The gross lending trend since the summer has been in an upward trajectory, so I’m surprised the market has stumbled, with gross lending down 7% to £20.5 billion from August.
“There was a 7% rise in gross lending in August, but the month saw a drop in approvals which has followed through into September, effectively wiping out that gain. In spite of the fact that positive movements in the market all pointed to a continued recovery from the post-referendum and summer lull, borrower sentiment has not matched market expectations. However, I think this is just a blip.”
“No doubt we’ll see lower numbers as we head into the mid-winter seasonal slow-down in activity, however the signs for October still look pretty positive.”