Gross mortgage lending surged to £25.7bn in March, driven by buyers trying to beat the second property stamp duty surcharge deadline.
According to the Council of Mortgage Lenders, lending was 43 per cent higher than in February when it was £18bn.
Compared to March last year when it was £16.2bn, lending is 59 per cent higher.
The latest figures were also the highest March figure since 2007 when gross lending reached £30.9bn.
CML economist Mohammad Jamei said: “Against a backdrop of a recovering market, the substantial jump in lending in March was significantly influenced by a late surge of activity to beat the government’s stamp duty change on second properties, which came into effect at the start of April.
“The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we’ve seen.
“As a result, we expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March.”
One other reason for why activity would dwindle in the second quarter of 2016, Mr Jamei said, was because of uncertainty surrounding the EU referendum in June.
Gross mortgage lending for the first quarter of this year was therefore an estimated £62.1bn.
This is the same level as in the previous quarter, but 39 per cent higher than the first three months of 2015.
In last year’s Autumn Statement the Chancellor of the Exchequer announced owners of second homes - including buy-to-let investors - would face a 3 per cent stamp duty surcharge from this month.
Beyond the buy-to-let sector, Mr Jamei re-iterated the CML’s concerns about housing supply.
He said: “The tension between housing supply and demand continues to be a pressing issue, as has been the case for some time now.
“While we saw signs of a potential improvement in the supply of properties coming on the market over the last few months, this seems to have stalled somewhat in March, according to the Royal Institution of Chartered Surveyors.
“This imbalance is likely to add to house price growth over the near term.”
Adrian Whittaker, sales director of New Street Mortgages, said: “It is no surprise that lending has risen significantly this month, as buyers who were planning a buy-to-let purchase rushed to complete their mortgage applications ahead of the changes to stamp duty.
“Whilst we may see this demand tail off now that these measures are in effect, competition in the market will remain strong as people continue to look to buy-to-let as an investment vehicle.
“The smart lenders are actively helping buyers to get ahead in this race to buy property, using financial technology to empower brokers with transparency and to speed up mortgage applications.”
