Gross mortgage lending was £20.6bn in October, down 5 per cent year-on-year, according to figures from the Council of Mortgage Lenders.
Gross lending in September was £20.5bn.
The trade body estimates that gross lending for the whole of 2016 will be between £240-245bn, which would represent a 10-12 per cent rise compared to 2015.
CML senior economist Mohammad Jamei says: “Housing market sentiment is holding up well, with demand still strong. This has led to a pick up in approvals, as expected.
“The more pressing issue is on the supply side, where the lack of private sellers continues to be an obstacle for would-be borrowers.
“For this reason, we expect lending in the months ahead to be driven more by remortgaging activity and less by house purchases. Remortgaging will be helped by competitively priced mortgage deals, which are encouraging borrowers to refinance.”
OneSavings Bank sales & marketing director John Eastgate says: “Mortgage activity is in good health, reflecting growing consumer confidence after the EU referendum and impressive resilience in a quite exceptional year.
“Borrowers are benefitting from record-low interest rates, with remortgage activity buoyant, although purchases are constrained by lack of homes for sale.
“However, with the government set to fall short of the 200,000 new homes it had committed to providing annually, the UK’s chronic housing shortage, and resultant rising house prices, are set to remain a major barrier towards lending growth. Tax changes on buy to let will only make matters worse.”
Anderson Harris director Jonathan Harris says: “With lenders vying for business ahead of the year-end and demand for mortgages for house purchase steady but not spectacular, banks and building societies realise there is plenty to be gained by slashing the pricing on remortgage deals.
“With plenty of uncertainty following the referendum, it is no surprise that longer-term fixed rates are so popular. With the average five-year fixed rate falling below 3 per cent for the first time, and the best priced deals a lot cheaper than that, borrowers can get security for a decent period of time at an excellent rate.”
Estate agent and former RICS residential chairman Jeremy Leaf says: “The seasonal pick-up in activity and approvals is welcome and shows again the resilience of the housing market.
“However, at the coalface we would like to see an acceleration in the time taken to approve mortgages and a relaxation in lending criteria to help compensate for the lack of stock on the market.
“Looking forward we hope the Chancellor picks up on the importance of helping first-time buyers onto the ladder, particularly now buy-to-let investors seem to be scared of from adding to their portfolios in the light of previous changes to legislation and taxation.”