Mortgage application numbers increased by almost 23% in September compared to the same month last year, figures from Stonebridge show.

The mortgage network found that borrowers are increasingly favouring shorter-term fixes, with 64% of new fixed-rate loans taken out for three years or less, up from 56% a year earlier.

Borrowers chose fixed rates over variable rate deals in more than 95% of cases.

Remortgage activity is dominating the market, representing almost 62% of applications, up from 57% at the same point last year.

Chief executive Rob Clifford says the jump in mortgage applications year-on-year is a clear sign that confidence is returning, even in the face of wider economic headwinds.

He adds: “A big driver is the fall in rates from their recent peak.

“The average rate on new lending now stands at 4.4%, 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.”

Clifford says the sizeable shift in borrowers opting to fix for three-years and under, shows homeowners are keeping their options open in an uncertain environment.

He adds: “While borrowers still favour the certainty of a fixed rate deal, most are unwilling to lock themselves into a long-term deal.

“With talk of recession growing louder and business confidence at record lows, many households appear to be hedging their bets.

“Short-term fixes are increasingly seen as the middle ground between security and flexibility.”