Gross mortgage lending reached £20bn in September, up 2% on August’s figure of £19.7bn and up 12% on September last year.

The Council of Mortgage Lenders says it is the fourth month in a row that there has been an improvement.

It estimates that gross lending in the third quarter was £61.4bn, 18% up on the second quarter and 12% up on the third quarter last year.

CML economist Mohammad Jamei said lending is at its strongest since 2008, with the second half of this year seeing a pick-up in housing market activity.

He said: “Low inflation, strong wage growth, falling unemployment and competitive mortgage deals are all helping to support housing demand.

“We expect to see further modest growth towards the end of the year, although affordability pressures are likely to limit gains for home movers and first-time buyers.”