Gross mortgage lending saw an increase of 8 per cent in 2015, taking the estimated total for the year to £220.3bn compared with £203.3bn in 2014, according to the Council of Mortgage Lenders.
According to CML estimates, gross mortgage lending reached £19.9bn in December, 3 per cent less than in November, when lending stood at £20.5bn, but 23 per cent higher year-on-year at £16.2bn.
Gross mortgage lending for the fourth quarter was therefore an estimated £62.3bn, a 1 per cent increase on the third quarter and a 23 per cent increase on the fourth quarter of 2014.
CML economist Mohammad Jamei said the year-end total was slightly more than anticipated.
He said: “The low inflation environment, along with real wage growth, an improving labour market and competitive mortgage deals have all helped to underpin demand.”
Looking ahead, he said the upside potential looks limited over the near-term.
Mr Jamei said: “The supply of existing and new properties on the market remains weak and affordability pressures weigh on activity. There is an added element of uncertainty as we wait to see the impact of tax changes on the buy-to-let sector.”
Henry Woodcock, principal mortgage consultant at Iress, said buyers continued to rush to complete ahead of Christmas, with an acceleration in buy-to-let lending ahead of the stamp duty hike this year keeping the market alive and kicking.
He said: “We expect 2016 to continue in the same light initially, although regulatory change may take its toll. Demand will be bolstered by fast movement in the buy-to-let market ahead of April’s deadline and a rise in rates ruled out for 2016, affordable finance will remain in place for borrowers and prospective buyers.”
Jeremy Duncombe, director of Legal & General’s Mortgage Club, said despite an increase in gross mortgage lending the number of transactions has remained relatively flat as a result of the lack of available housing stock.
He said: “This is contrary to the increases we are seeing in lending, showing that this strong performance is being driven in part by escalating house prices as people are having to take out larger loans to secure a property.”
Steve Griffiths, Kensington’s sales and distribution head, added that it was important to look beyond headline lending figures to identify the true health of the market.
He said: “A healthy mortgage industry is one that is able to cater for a broad range of customer circumstances, reflecting the diversity of employment and demographic changes of our population.
“It is vital that specialist lending grows in line with these changes, so that we are able provide opportunity for credit worthy individuals whose circumstances do not tick the boxes of a standard application.”