Mortgage approvals to home buyers increased to their highest level in over five and-a-half years in October, the Bank of England has reported.
Some 67,701 mortgages worth £10.5 billion were approved for house purchase in October, the highest total since February 2008 when nearly 69,000 were approved.
The bank has now taken the first step in applying the brakes to the property market by announcing it is refocusing a lending scheme towards helping small businesses borrow.
A mortgage price war broke out after Funding for Lending was launched in August last year and the number on the market has since surged by 40%.
The bank's new figures also indicate that as Christmas approaches, people are cautious about taking on more debt with a sharp fall in borrowing on personal loans and overdrafts compared with September.
Demand from would-be home buyers is expected to pick up further in the coming months because of the Government's Help to Buy scheme which was extended in October to offer state-backed loans to people with 5 per cent deposits.
The bank's figures show that 35,261 remortgaging deals worth £5.3 billion were approved in October, slightly above the six-month average of around 33,800.
Matthew Pointon, a property economist at Capital Economics, said the mixed message from the Bank of England in trying to cool the property market, just as expectations are being raised by the new phase of Help to Buy, could have a dampening effect.
"There have been some tortuous attempts to explain how all these policies fit together, but the end result is a bit of a mess," he said.
"That could in itself serve to confuse potential buyers, and that may hold them back from jumping into the housing market."
Household finances are "not strong enough" to support a countrywide house-price boom, Mr Pointon said.
The bank's figures also show a sharp drop in growth of consumer credit, made up of lending on credit cards, personal loans and overdrafts.
Consumer credit grew by £457 million in October, halving from a £1.1 billion rise the previous month.
Borrowing on credit cards grew by £238 million in October, in line with the long-term average, but personal loan and overdraft lending saw a more muted rise of £219 million, falling back from September's five-and-a-half year high of £935 million.
Experts suggested that October's figures are a sign that people are still wary of taking on more debt, despite some evidence of increasing confidence in recent months.