Mortgage approvals leap 6% in a month as "confidence sweeps through the industry"

September added to the confidence sweeping through the mortgage industry as mortgage approvals, house purchases and gross lending all grew strongly.

New figures from the British Bankers' Association, published yesterday, showed the value of mortgage approvals hit £10.5 billion in September, 6.1% higher than in August.

There were 74,647 house purchase approvals in September, up 6.2% from 70,289 in August.

Gross mortgage lending rose 2.1% in September to £9.7 billion, although net lending fell by £300 million, as buyers continued to pay off debt.

David Brown, commercial director of LSL Property Services, said banks have caught hold of the confidence that’s sweeping through the property industry. "Demand for property is surging, with people once again starting to feel optimistic and confident about their own financial futures.  

"We’re a long way from bubble territory here, so lenders appear to be pulling out all the stops. Most importantly, this spirited rejuvenation is benefiting the bottom of the market too. The economic recovery is off the ground, and gaining some altitude.”

Lea Karasavvas, managing director of Prolific Mortgage Finance, said the mortgage market has been "absolutely booming" in September and October. "Activity-wise, the last time the market was like this was 2006. The autumn is usually a busy time in the property market but this year it is astronomically busy.

"With rates for first time buyers below 4% and two-year fixed rates now half of what you're paying on a variable rate, it's no surprise there is more activity.

"People are making the house move they've wanted to make for years and are remortgaging onto what they sense to be once-in-a-lifetime mortgage rates. 

"It's not just London that is seeing a sharp rise in activity. House purchases and remortgages are improving all around the country.

"Clearly there's a worry that the property market is starting to overheat. In the case of the capital, it's certainly hot but in the rest of the country there's a long way to go yet. 

"With supply an issue in London, there is, to some extent, a glass floor under prices."

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "While money market rates edge up slowly, a number of lenders have reduced their mortgage pricing to attract business and meet year-end targets. We expect this to continue, with some cracking deals available to buyers and those remortgaging over the next couple of months.

"It is also encouraging that there remains a strong trend for borrowers to overpay on their mortgages, taking advantage of low interest rates and paying down debt where they can.

"Confidence may be growing in the housing market but homeowners are reluctant to take on more borrowing while there is still uncertainty with regard to the economic and jobs' climate."

Paul Hunt, managing director of Phoebus Software said: “Figures paint a bright picture for the property industry as the market is palpably stronger than a year ago.

"It’s positive that lenders are being innovative in their approach by focussing on a wide range of borrowers. This is vital as more activity at the bottom of the property ladder between first time buyers will strengthen the rate of recovery across the market.”