Lending on dwellings increased by £0.6bn
The number of loans approved for house purchase increased from 49,644 in July to 52,410 in August, higher than the previous six-month average of 47,551.
The number of remortgage approvals in August increased 9% to 34,668 from July and was also higher than the previous six month average of 31,279.
Paul Hunt, managing director of Phoebus Software, said: “The fastest growth in August was for remortgage approvals which were up by 9%, as existing homeowners are taking the opportunity to lock themselves into the very low fixed rate deals currently on offer.
“But lenders haven’t left those looking to finance new purchases in the cold either. House purchase loans were up 5% last month as the affordability of finance has improved lenders’ confidence.
“Although there’s a very long way to go, the return of 100% mortgages[and] consistent lending at higher LTVs means hoping for a market recovery in the next few months is by no means pie in the sky.”
However, David Brown, commercial director of LSL Property Services, added: “The increasing level of house purchase lending should provide reassurance for both home buyers and for would-be landlords, and demonstrates that banks and building societies do have the appetite to lend.
“While would be buyers make take comfort from the up-tick, demand for buy-to-let has been a key driving force behind the improved lending picture in August.
“Despite the recent withdrawal of quite a few cheaper rates in the last week, there are still more than double the number of buy-to-let products on the market compared to last year, and demand for finance from would-be investors remains strong.
“With gross yields stubbornly remaining above 5%, demand at an all-time high, and average rents climbing as high as £713 per month, many investors are making hay while the sun shines and this has been reflected in an expanding buy-to-let mortgage market.
“However, we don’t foresee a dramatic and sustained improvement in the level of lending across the wider market in the foreseeable future. The outlook for the economy has worsened in recent months, and many banks still must repay money they owe the government.
“Against this backdrop, it’s unlikely many will be able to vastly up their commitment to mortgage lending in the medium-term.”