The mortgage market is "buzzing" as mortgage approvals jumped by 14% in September alone and gross lending hit the highest level since October 2008, according to Bank of England figures.
And there's more growth to come, with industry experts expecting October's figures to be even better.
Growth has been driven by cheaper loans, with new mortgage rates hitting an all-time low of 3.08% in September, down from 3.15% in August.
The effective rate on all lending also hit a record low, with the average rate on outstanding mortgages dipping slightly to 3.3%, down from 3.32% in August.
BoE figures also showed the value of new home loans hit £10.1 billion in September, while lending by mutuals leapt 50% over the last 12 months to £3.7 billion, according to data from the Building Societies Association.
But the 14.1% rise in mortgage approvals to 66,735 in September is still way below the average 100,000 a month seen before the financial crisis.
David Whittaker, managing director of Mortgages for Business, said: “The financial world has a new buzz and lease of life, providing a much-needed boost to the property market. Every indicator is now pointing upwards, with all expectations that this month will see even more lending than September."
Richard Sexton, director of e.surv chartered surveyors, said: “What a difference a year makes, the mortgage market has been transformed.
“House purchase lending has hit a fresh high. It was significantly higher in September than in August, with 5% more lending. But yearly, the increase is stupendous, up by over 34%.
“While home approvals and house prices are racing ahead, the recovery in lending is yet to spread nationwide. It is still being pegged back in many areas outside of London and the South East, where the job market is slowly recovering, and the cost of living is still high."
David Brown, commercial director of LSL Property Services, welcomed "a buoyant housing market and rejuvenated house prices": “Mortgage lending in the UK is a completely different beast from just a year ago. The rising tide of lending seems to be a force of nature – loan approvals are ticking upwards, pointing to even better figures next month."
Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said first-time buyers aren't the only ones taking advantage of the current competitive rates. “This continuing upward trend bodes well for the future, but lenders and brokers alike believe there is plenty still to come.
“Help to Buy should help to sustain this momentum, but we are unlikely to see a return to what might be deemed a ‘normal market’ for another two to three years due to the extent of the downturn.”
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “With high street mortgage lending stepping up a notch even before the arrival of Help to Buy 2, it’s clear that mortgage finance is becoming increasingly accessible and there is now every reason to think about jumping on the property ladder.
“Mortgage rates are at historic lows, with two, three and five year fixes all below 4%. Combined with a rapidly expanding selection of products, we’re left with the perfect conditions to boost consumer confidence.
“With the outlook for the end of 2013 and beyond increasingly positive, consumers who have their deposit ready should lock into rock-bottom rates before they inevitably rise.”
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