Mortgage lending is enjoying its best spell for seven years after surging 12% year-on-year to £61.4 billion in the third quarter.
The Council of Mortgage Lenders estimates that gross mortgage lending hit £20 billion in September, 2% higher than August’s total.
This is the fourth month in a row to see a sharp improvement in year-on-year lending.
CML economist Mohammad Jamei said mortgage lending is enjoying its best spell since 2008. “The second half of 2015 has seen a pick up in activity in the housing market after a slow start to the year.
“Low inflation, strong wage growth, falling unemployment and competitive mortgage deals are all helping to support housing demand."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the mortgage market is in "rude health".
“Competitive deals, low interest rates, and falling unemployment are all combining to encourage borrowers to take out a mortgage or refinance their existing loan.
“Although a strong surge of lending is not forecast, the continued uptick in borrowing is preferable as it is more considered and sustainable."
Harris said the mortgage market is over-supplied with lenders having more money to lend than there are people looking for mortgages.
“This means criteria will have to loosen and rates will have to remain low to ensure lenders hit their volume targets.”
Jeremy Duncombe, director, Legal & General Mortgage Club, said total 2015 lending is still likely to fall short of the anticipated £220 billion.
“As remortgaging has not increased as much as was expected, total lending for the year is now likely to be around £210 billion.
“This would still be an increase on lending last year, showing the market is continuing to grow."
Duncombe urged advisers to talk to clients to explain the benefits of remortgaging and dangers of waiting until the Bank of England raises rates.
John Phillips, national operations director at Just Mortgages, said the only hurdle to future lending growth is the lack of housing supply, which is unable to keep up with ever-increasing demand.
“If the market continues to improve at this rate, it is possible that we will reach £216 billion gross lending by the end of 2015.”
Paul Hunt, Phoebus Software managing director, said: “Demand still outweighs supply in many areas which may be one thing that could stall the market if house prices then rise to levels that make affordability more difficult.”