The Council of Mortgage Lenders (CML) has estimated that gross mortgage lending reached £20.5 billion in September.

This is 7% lower than August’s lending total of £22.1 billion, and 2% higher than the £20.1 billion lent in September last year. This is the highest September figure since 2007 when gross lending reached £29.9 billion.

Gross mortgage lending for the third quarter of 2016 was therefore as estimated £63.6 billion. This is 11% higher than the second quarter of this year, and 4% higher than the third quarter of 2015.

CML senior economist Mohammad Jamei said: “Remortgage activity looks set to grow, helped by attractively priced mortgage deals encouraging borrowers to refinance. Prospects for house purchase activity continue to look slightly subdued, when compared to the same period a year ago.

“Despite this, housing market sentiment continued to improve in September, after recovering in August. As a result, we expect a modest rise in approvals, though at levels lower than seen earlier this year, as the lack of properties on the market for sale and affordability constraints continue to bear down on borrowers.”

Andrew McPhillips, chief economist at Yorkshire Building Society, said: “Although mortgage lending has decreased compared to last month, it is still up on an annual and quarterly basis. This monthly decrease was most likely a result of a reduction in house purchase activity caused by the lack of available properties. This, along with affordability constraints as house prices have continued to climb upwards, has limited the number of people who are able to afford to buy a property. Conversely, remortgage activity is likely to show strong growth in the coming months as borrowers seek to make the most of record-low interest rates to reduce their monthly repayments.

“In order to help more people to achieve their goal of owning a property, the UK must build more homes to bring supply in line with demand and reduce house price growth to make houses more affordable. The government should also consider introducing measures to help more people onto the property ladder in the short-term, such as by making stamp duty a seller’s tax instead of a buyer’s tax to reduce costs for first-time buyers and those moving up the property ladder.”