Some £20 billion of mortgage deals were handed out in August, marking the highest figure seen for that month since 2007, the Council of Mortgage Lenders (CML) has reported.
The latest figures also show that UK mortgage lending in the first eight months of the year has exceeded annual lending as a whole during the credit crunch.
A total of £138.6bn has been borrowed so far this year.
Bob Pannell, chief economist at CML, said: “Mortgage lending is currently enjoying its best spell since 2008, on the back of a pick-up in house purchase and remortgage activity over the summer months.
“August’s lending of £20 billion marks the third month in a row of strong year-on-year growth. We expect further modest growth for the rest of the year, although affordability pressures are likely to limit gains for first-time buyers and home movers.”
A mortgage price war helped, with many lenders slashing the rates on their deals to the lowest they have ever offered.
But there have recently been signs of lenders starting to tweak their rates upwards, and speculation about the possibility of the Bank of England base rate rising from its record 0.5 per cent low, prompting some mortgage holders to lock into a cheap deal before it disappears.
Jody Baker, head of money at the price comparison website comparethemarket.com, said it was crucial people shop around.
She said: “If the property market continues to heat up, this may play into the hands of consumers as increased competition amongst lenders could help keep interest rates low.
“As house prices soar, affordability is likely to reduce. As a result, the type of mortgage that consumers sign up to is becoming increasingly important. It is essential that those looking to get a mortgage or re-mortgage shop around to see who offers the best rates.”
The Council of Mortgage Lenders’ members are banks, building societies and other lenders who together undertake around 95 per cent of all residential mortgage lending in the UK. There are 11.1 million mortgages in the UK, with loans worth over £1.3 trillion.
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