Mortgage borrowing increased to £6.1 billion in August, from £5.1 billion in July, according to the Bank of England.

This is above the pre-pandemic average of £4.3 billion in the 12 months up to February 2020.

Approvals for house purchases, which is usually a good indicator of future borrowing, increased sharply to 74,300 in August, from 63,700 in July. It was a ‘a notable rise’ compared to a downward ternd in the few months before, said the Bank.

Remortgaging was up too, to 49,400 in August from 48,400 in July.

The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased to 2.55% in August.

Of course, a lot has happened since then.

Huge change

All of these figures are from data collected in August, before the recent budget, which had significant and far-reaching consequences on the mortgage market.

With over 1,000 products pulled from the market and many others repriced upwards, next month’s lending figures and effective interest rate will be awaited with interest.

Craig Fish, managing director at broker Lodestone, said: “It’s interesting to see that the number of mortgage approvals for house purchase increased sharply in August, and I suspect this had a lot to do with people pre-empting more rate rises. They weren’t wrong based on everything that’s happened over the course of the past week.”

Ashley Thomas, director of broker, Magni Finance, added: “Wait until you get the next report, and effective interest rates will be above 5% the way things is going, perhaps over 6%. Most rates are now at 5% with some lenders over 6%. It is going to be an extremely challenging time for a lot of people with rates at this level.”