Gross mortgage lending grew 30 per cent year-on-year in February, according to the Council of Mortgage Lenders.
Lending hit an estimated £17.6bn last month, which was the highest February total since 2008 when lenders advanced £24.1bn to borrowers.
While lending was up year-on-year, it fell 5 per cent from £18.5bn in January.
CML economist Mohammad Jamei says: “Lending continues the year on a positive note, with our monthly estimate showing an increase of 30 per cent in February compared to a year ago. This growth rate is in line with what we saw in the closing months of 2015. The recovery is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by government schemes and competitive mortgage deals.
“But we think it unlikely that there will be any significant acceleration in lending. While there may be a slight current boost to lending as some transactions seek to complete before the 1 April tax changes in the buy-to-let-sector, this is likely to be followed by a slight fall in activity. Affordability pressures continue to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently.”
SPF Private Client chief executive Mark Harris says: “While the industry absorbs the news in yesterday’s Budget, the mortgage market continues to tick over, with lending in February up almost a third on the same month last year. Higher wages, a fall in unemployment, cheap mortgage deals and the likelihood that interest rates won’t rise anytime soon, are boosting confidence and promoting growth.
“We expect this situation to continue in coming months. There are potential hiccups on the horizon which may foster some uncertainty, such as the EU referendum, but for many people life will go on and it will be business as usual. The challenger banks are keen to lend, while more established lenders also wish to bring in more business, which will be reflected in cheap rates and some tweaking of criteria. On the buy-to-let side, lenders will need to adapt to lending to limited companies as it looks as though an increasing number of investors will go down this route.”