Mortgage lending hit is highest figure for September since 2007, before the financial crisis struck.

The Council of Mortgage Lenders (CML) said gross mortgage lending hit £20.5bn ($25.1bn, €23bn) during the month, down 7% on August but 2% higher than in September 2015. The previous September peak in 2007 was £29.9bn.

But growth is fuelled largely by remortgaging activity as existing borrowers look to take advantage of the Bank of England's cut to interest rates, slashing its own base rate in half to 0.25%, an all-time-low, to keep the economy stimulated amid Brexit-related uncertainty.

"Remortgage activity looks set to grow, helped by attractively priced mortgage deals encouraging borrowers to refinance," said Mohammad Jamei, CML's senior economist. "Prospects for house purchase activity continue to look slightly subdued, when compared to the same period a year ago.

"Despite this, housing market sentiment continued to improve in September, after recovering in August. As a result, we expect a modest rise in approvals, though at levels lower than seen earlier this year, as the lack of properties on the market for sale and affordability constraints continue to bear down on borrowers."

"The gross lending trend since the summer has been in an upward trajectory, so I'm surprised the market has stumbled," said Henry Woodcock, principal mortgage consultant at IRESS. "There was a 7% rise in gross lending in August, but the month saw a drop in approvals which has followed through into September, effectively wiping out that gain.

"In spite of the fact that positive movements in the market all pointed to a continued recovery from the post-referendum and summer lull, borrower sentiment has not matched market expectations. However, I think this is just a blip."

The Office for National Statistics (ONS) said the average UK house price rose 8.4% over the year to August, hitting £219,000.