Mortgage lending soared to one of the highest figures on record during August as people switched their home loans to better deals.
Total advances rose by nine per cent during the month to £27.5 billion - the highest figure since July last year, according to the Council of Mortgage Lenders. Within
2003. this there was a 15 per cent jump in people remortgaging, with £11.7 billion lent to those who were changing provider, a level not seen since October
The CML put the renewed levels of activity down to homeowners taking advantage of lower interest rates to get a cheaper deal, including a large number of people who were coming to the end of fixed rate loans.
There was also a rise in other types of lending, with the value of mortgages for people moving house increasing by six per cent to £12.5 billion, while the number of loans jumped to 101,000 from 96,000 in July, although this was still below the 110,000 recorded in August last year.
At the same time there was an 11 per cent hike in the value of equity people unlocked from their homes during the month.
The popularity of fixed rate mortgages continued as their rates fell in comparison to variable rate loans, with fixed rate deals accounting for 54 per cent of all mortgages taken out during August, the highest proportion since the CML began to keep monthly records in 1998.
Michael Coogan, director- general of the CML, said: "The doom-mongers' prophecies look to have been wrong, as lending has continued to strengthen over the summer.
" Although the market remains far from spectacular in terms of transaction numbers and house prices, the prospects of a significant market correction are receding. We continue to expect a moderate market for the foreseeable future."
Lending figures reported by the British Bankers' Association showed the mortgage market stabilising after a weak July.
The group said net lending, which strips out redemptions and repayments, by the major banks during August rose by £4.27 billion, which was above July's subdued £3.74 billion and in line with the average of the past six months.
But at the same time, it said, credit card lending had fallen for the second time in five months.
During August consumers paid back £146 million more on their plastic than they spent, which the group said tied in with weak retail sales.
Lending through loans and overdrafts was more buoyant, rising by £842 million, well up on July's figure of £324 million and a recent average of £400 million.
John Butler, of HSBC, said: "Households' appetite for debt appears to have stabilised at still high levels."
He said the lending figures suggested that both the housing market and household borrowing had stabilised for the time being.