The Council of Mortgage Lenders estimates that gross mortgage lending reached £17.9bn in January, up 21 per cent year-on-year.
The January estimate is 9 per cent lower than December 2015’s £19.8bn.
The CML says the figure is the highest lending total for a January since 2008 (£25.2bn).
CMl economist Mohammad Jamei says: “UK market fundamentals are helping to underpin this recovery, with real wage growth, an improving labour market, competitive mortgage deals, and government schemes all supporting household demand.
“We still only see limited upside potential going forwards, as the number of properties for sale on the market remains low and affordability pressures weigh on activity. Upcoming tax changes in the buy-to-let sector are adding an element of uncertainty to the market.”
Legal & General Mortgage Club director Jeremy Duncombe says: “January saw a significant increase in lending compared to previous years as the growth in house price inflation drove lending beyond what we would normally see at the beginning of the year. It is therefore crucial to note that the annual rise in gross mortgage lending largely reflects an increase in the size of loans rather than the number secured.
“A lack of supply has been a major concern in the housing market in recent years, intensifying competition and having a detrimental effect on affordability. Buyers have resorted to taking on larger mortgages to finance their homes. If we are to make homes more affordable, more work should be done to provide housing to areas which need it the most so that there are enough homes for people to buy.”
IRESS principal mortgage consultant Henry Woodcock says: “Even though inflation has crept up over the last few months and wage growth has slowed slightly, a strengthening remortgage market and an intensely competitive mortgage market are helping to support housing demand.
“Additionally, with the BoE base interest rate expected to remain low for another year, borrowing is likely to remain cheap for some time. This will undoubtedly support further market growth.”