Despite the drop lending secured on properties accelerated by £2.3bn in August compared to an average increase of £2.1bn over the last six months.
Gross lending secured on dwellings was £17.5bn in August while repayments stood at £15.6bn.
David Newnes, director of Your Move and Reeds Rains estate agents, said: “A cloud is momentarily dulling the view of the mortgage market, after a sunny few months for lending.
"But from a first-time buyer’s perspective the borrowing outlook hasn’t been this bright for years.
"Help to Buy has gone some way to break down the mighty deposit barrier, and has unleashed a new surge of higher LTV lending which has put homeownership within the sights of thousands of aspiring buyers. Thanks to this support, higher LTV lending is currently forming the highest proportion of house purchase approvals since the financial crisis.
“We shouldn’t down these tools just yet. The recovery still requires some reinforcement outside the South East corner of the country. House price growth is grindingly slow in many regions, and many homeowners are still waiting for prices to surface above pre-crisis benchmarks. In these places, new buyer demand is essential to propel total activity upwards and build on the recovery. Stricter loan criteria and unnecessary tinkering in the context of worries about rising interest rates, could rain on consumer confidence and activity.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “One would expect the mortgage market to slow down in August as it is traditionally a quiet time of year but as a business we had one of our best months, emphasising the continued strength of the mainstream London property market in particular.
“With Mark Carney stating last week that the first interest rate rise is getting closer, borrowers should not be complacent about low interest rates.
“While the Governor of the Bank of England pledged that increases would be 'limited and gradual' borrowers must still plan ahead and ensure they can afford their mortgage now - and in the future.
“5-year fixed rates in particular are good value and provide certainty for the medium-term.”
Duncan Kreeger, director of lender West One Loans, added: “In the real economy opportunities are now flowing freely, but traditional lenders are still restricting liquidity."
