In the strongest start to the year since 2008, gross mortgage lending in the UK hit £15.5bn in January.
Figures from the Council of Mortgage Lenders, which reports actual mortgages advanced to buyers, show that lending was up 33 per cent on the previous January.
There was a fall of 8 per cent compared with the previous month, but the CML cautioned against reading too much into the fall noting that low activity levels over the winter often led to fluctuations in the reading.
The CML is still forecasting gross lending to rise 15 per cent in 2014, but it expects rises to moderate throughout the year because of affordability pressures.
Lending figures still remain substantially down on their peak. In 2007, the CML reported lending of £362.8bn, compared with £176.4bn in 2013.
CML chief economist Bob Pannell cautioned against assumptions that the property market would accelerate sharply, despite the fact that monthly approvals for house purchases averaged 70,000 in the final quarter of 2013, the strongest for six years.
“The Bank of England envisages that approvals may climb to 90,000 a month in the second and third quarters. Unless the bank is expecting cash purchases to fall away sharply (and they have been resilient over recent years), this would seem to imply property transactions running for a while at an annualised rate of 1.5m or so,” Mr Pannell said.
“This looks like an optimistic out-turn, and somewhat counter-intuitive, given the growing anecdotal reports of a shortage of prospective sellers.”
Howard Archer, chief UK economist at IHS Global Insight, said he expected house prices to increase further over the coming months despite the ending of Funding for Lending.
“While the strength of house prices is not yet a serious concern outside of London, it is something that needs to be closely monitored given that a number of recent data and surveys have indicated that the strength in house prices is becoming more widespread. There is rising buyer interest and strengthening market activity across regions,” Mr Archer said.
Thursday’s figures are the latest signs of growing strength in the housing market. In January, lenders responding to the Bank of England’s quarterly credit conditions survey reported mortgage demand surging at the fastest rate in at least six years.
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