Gross mortgage lending totalled £11.7bn in December 2011, 12% higher than the same period a year ago, according to the Council of Mortgage Lenders.
But on a monthly basis gross lending fell 12% from the £13.2bn advanced in November.
In Q4 2011 gross lending totalled £37.3bn, down from £39.2bn in Q3 but 11% higher when compared with the same period in 2010.
The December figure brings the total amount lent in 2011 to £140bn.
Bob Pannell, chief economist at the CML, says: “There is a glimmer of light ahead for households in that real incomes could stabilise and perhaps even start rising by the end of the year.
“But eurozone problems mean mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call.”
David Brown, commercial director of LSL Property Services, says that while house purchase lending showed signs of improving, there was also renewed appetite for mortgage finance from property investors keen to exploit low rates, healthy yields and record tenant demand.
However he adds: “With lenders cautious about the prospects of the labour market and the direction of the economy, lending will not rocket in 2012, and constraints on mortgage finance for higher LTV buyers will remain in place, reining in first-time buyer activity.”
But Richard Sexton, director of e.surv, says boosting lending to first-time buyers isn’t on lenders’ radars.
He adds: “Banks will focus on lending to wealthier buyers until the economy improves.”