"We expect lending in the months ahead to be driven more by remortgaging activity and less by house purchases."
This closely matches September’s gross lending total of £20.5 billion but remains 5% lower than October last year.
CML senior economist, Mohammad Jamei, commented: "Housing market sentiment is holding up well, with demand still strong. This has led to a pick up in approvals, as expected.
"The more pressing issue is on the supply side, where the lack of private sellers continues to be an obstacle for would-be borrowers.
"For this reason, we expect lending in the months ahead to be driven more by remortgaging activity and less by house purchases. Remortgaging will be helped by competitively priced mortgage deals, which are encouraging borrowers to refinance."
John Goodall, CEO and co-founder of Landbay, said: “The housing market is enjoying a return of buyer confidence following a politically turbulent summer, and many existing homeowners are choosing to take advantage of low interest rates to refinance their mortgage. However, this growth in lending volumes belies a much more mixed picture across the sectors. Buy to let lending levels remain around 24% down on this time last year, as April’s 3% stamp duty hike caused an initial wave of transactions, but left in its wake a much more subdued market.
“The fundamentals of the buy to let market are still pointing toward long term sustainable growth, but landlords have had a white knuckle ride over the last 12 months, and we hope to see them given some relief at next week’s Autumn Statement.”
Henry Woodcock, principal mortgage consultant at IRESS, added: “Over the last four years, gross mortgage lending in October has shown a trend to be strong, with last year’s lending figures the highest since July 2008. Recent market conditions and indicators all showed positive signs, so the expectation was that the market would continue grow, which it has, but surprisingly, only by a very small amount.
“The outlook for both homebuyers and existing homeowners is still looking positive, thanks in part to the Bank of England's decision to cut interest rates to 0.25% back in August. Mortgage affordability has reached its best level since records began, with monthly mortgage costs hitting a record low for home movers and first time buyers alike.
“Record low rates have also helped to offset the impact of the uptick in house prices seen in some areas of the UK during recent times. The combined effect of all of this should make buying a new home - whether for first time buyers or movers - a more achievable prospect for many people as we head into 2017.
“I still think the mortgage market remains vibrant. Low interest rates, a levelling of house prices and continued consumer confidence have all combined to maintain market momentum.
“It’ll be interesting to see if the Chancellor has any good news for the mortgage and housing markets in the Autumn Statement. It’s expected he will confirm earlier announcements of funds towards new homes to be built by small firms, but many would like to see further investment into rental properties.”
