The average interest rate on gross advances fell by 5 basis points in Q4 2015 to 2.71 per cent, according to Bank of England figures.
The Bank’s Mortgage Lenders and Administrators Statistics show this is the lowest rate since the Bank began recording figures in 2007.
The Bank says the drop was driven by a fall in fixed rates of 7 basis points to 2.72 per cent, though this was offset by an increase in variable rates of 3 basis points to 2.63 per cent.
The overall interest rate on total amounts outstanding fell by 3 basis points to 3.07 per cent in Q4 2015, also the lowest since 2007.
Gross lending rose to £63.1bn in Q4 2015, up 1.6 per cent on the previous quarter and up 22.8 per cent year-on-year, according to the Bank.
Net advances in the period rose from £8.1bn in Q4 2014 to £14.2bn in the last quarter of 2015.
The percentage of loans to borrowers with poor credit history rose by 6.7 basis points in Q4 2015 to 0.26 per cent.
The proportion of fixed rate mortgages increased from 80.7 per cent in Q3 2015 to 84.1 per cent in Q4 2015.
Gross lending for house purchase was £4.37bn in Q4 2015, up 20.2 per cent on the final quarter of 2014.
The proportion of lending to first-time buyers rose by 0.5 per cent to 20.9 per cent in Q4 2015.
The value of these loan was £13.2bn in the period, up £2bn from £11.2bn in the final three months of 2014.
Buy-to-let made up 15.9 per cent of lending in Q4 2015, up from 15.6 per cent in the previous quarter and up 1 per cent year-on-year. Buy-to-let loans, including remortgages, rose to £10bn in the final quarter of 2015 compare to £7.7bn in the same period of 2015.
The proportion of remortgages increased from 24.1 per cent in Q3 2015 to 25 per cent in Q4.
Other lending made up 3.5 per cent of lending in 2015, up from 3.4 per cent in the quarter before.
Legal & General Mortgage Club director Jeremy Duncombe says: “Interestingly, lending on products with an LTV of 90 per cent or over was slightly down compared to the previous quarter, showing that lenders’ risk appetite’ don’t seem to be increasing.
“This doesn’t improve the positions of first time buyers and those with smaller deposits looking to take a step onto or up the property ladder, but who may be struggling to save the large sums required to buy in a demand-centric market.
“Inadequate housing supply therefore remains the core issue at the heart of the market.”
New Street Mortgages sales director Adrian Whittaker says: “There was clearly a growing demand for mortgages towards the end of 2015 as more and more buyers looked to secure a property. This trend is likely to continue into 2016 as the market moves towards a ‘new normal’.”
The Mortgage Lenders and Administrators Return statistics come from the returns of around 300 regulated mortgage lenders and administrators.