Around £16.6 billion worth of mortgages were advanced to borrowers last month, marking a 28% increase on the same period in 2012, the Council of Mortgage Lenders (CML) said.
The estimate for August marks only a slight drop on the £16.7 billion worth of mortgages advanced in July, which was the highest figure seen since October 2008.
Fears have been raised that Government schemes to kick-start the market such as Funding for Lending and Help to Buy could result in a house price "bubble", with the market overheating and borrowers over-stretching themselves, particularly in London where prices have risen by around 10% year-on-year.
Mortgage availability has increased sharply in recent months, with some lenders offering record low rates.
First-time buyer numbers have also recently reached their strongest levels in more than five years, as lenders' appetite for more low deposit lending returns.
"We attribute much of this turnaround to the improvement in funding markets generally, and also to the Funding for Lending Scheme. The Bank of England's approvals data suggests that the positive tone for house purchase and remortgage lending will continue.
"One tell-tale sign of a recovering housing market is the re-emergence of concerns about a housing boom.
"But, as we have argued elsewhere, the housing market recovery to date appears fairly unexceptional in nature, at least compared with that of the early-mid 1990s."
Chancellor George Osborne yesterday dismissed concerns that the Government's policies to give more people a helping hand to buy a property will lead to house prices becoming over-inflated.
He said that despite the recent pick-up in activity, sales volumes are still at relatively low levels and house prices outside London have "barely grown".
Jonathan Harris, director of mortgage broker Anderson Harris, said: "Surprisingly, given all the talk of an overheating housing market, gross mortgage lending was steady in August compared with July.
"This is extremely encouraging, suggesting a sustained and considered improvement in the housing market, which is more likely to lead to a measured recovery, rather than a house price bubble."