Mortgage lending "pauses for breath"

However, gross mortgage lending is 28 per cent higher than August last year

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Gross mortgage lending was an estimated £16.6 billion, according to the Council of Mortgage Lenders, very close to July’s total of £16.7 billion but still nearly a third higher than August 2012's figure of£13 billion.

CML chief economist Bob Pannell said: "We are beginning to experience a healthy and broad-based recovery in mortgage lending activity. We attribute much of this turnaround to the improvement in funding markets generally, and also to the Funding for Lending Scheme. One tell-tale sign of a recovering housing market is the re-emergence of concerns about a housing boom. But the housing market recovery to date appears fairly unexceptional in nature, at least compared with that of the early-mid 1990s."

Sophie Hall, Head of Intermediary at Avelo, said: "The mortgage market has been roaring back into life, and these monthly figures represent lending pausing for breath rather than a premature end to the recent recovery. In reality, first-time buyers are still flocking to the market in their droves. Demand will go from strength to strength in the latter part of 2013."

Jonathan Harris, director of mortgage broker Anderson Harris, added: "Surprisingly, given all the talk of an overheating housing market, gross mortgage lending was steady in August compared with July. This is extremely encouraging, suggesting a sustained and considered improvement in the housing market, which is more likely to lead to a measured recovery, rather than a house-price bubble.

"Swap rates have fallen again in the past week so while a few lenders have raised or simply withdrawn their longer-term fixed rates, borrowers shouldn't panic about a sudden surge in pricing on fixed rates. If you see a rate you like, go for it but don't fret too much if you plan to buy or remortgage in a few months' time. Most lenders will let you reserve rates for up to six months so borrowers can do this if they still have concerns.

"The economy is turning a corner but let's not get too carried away: there is still a long way to go. The danger of over-reaction to a house-price bubble is that any confidence in the market is extinguished just as it is establishing itself. Lending volumes and house prices are still well below pre-crisis levels."

Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), said: "The mortgage market is clearly fulfilling its side of the bargain in supporting the recovering economy. With over 12,500 reservations for the Help to Buy equity loan scheme, there is extra incentive for housebuilders to do likewise and increase the supply of new homes firm in the knowledge this will be backed by mortgage availability."