The number of mortgage applications recorded in September was 22.7% higher than the same month in 2024, according to Stonebridge network's latest data.
Its analysis shows that the average mortgage rate has dropped by 32 basis points over the last year to 4.4%.
The average loan size rose 0.9% from the previous month, and now sits at £197,440.
While borrowers still favour the certainty of a fixed rate deal, most are unwilling to lock themselves into a long-term deal. In September, 63.7% of new fixed rate loans were for three years or less, up from 56% a year ago.
The research also shows that remortgaging continued to dominate activity in September, accounting for 61.5% of applications – up from 57% a year ago.
According to UK Finance, around 785,000 borrowers refinanced in the first half of the year, with 1.6 million fixed rate deals due to mature before the year is out.
Rob Clifford, chief executive of Stonebridge, commented: “The mortgage market is shifting up a gear. Applications rose 22.7% year-on-year in September — a clear sign that confidence is returning, even in the face of wider economic headwinds.
“A big driver is the fall in rates from their recent peak. The average rate on new lending now stands at 4.40%, down 32 basis points year-on-year.
"For a typical borrower, that equates to around £432 in annual savings compared with 12 months ago.
“While the Bank of England remains cautious on the future path of interest rates, current levels appear low enough to spur borrowers back into action. Coupled with the large number of loans due to mature in 2025, that should help underpin activity through the remainder of the year.”
