The Council of Mortgage Lenders has revised down its market predictions for 2017 because of uncertainty about Brexit.
A year ago the CML had predicted that 2017 would see gross lending of around £261bn but it has revised this figure down to £248bn.
It has also revised down its prediction of the number of residential property transactions from 1.26m to 1.17m.
Looking forward to 2018, the CML predicted there would be little growth with gross lending of £252bn.
In fact it predicted the number of transactions would continue falling into 2018, with 1.15m forecast for that year.
CML director general Paul Smee said: “Overall, the mortgage market remains resilient but is likely to plateau rather than grow much for the next couple of years.
“Gross lending is likely to hover around the £250 billion mark in 2016, 2017 and 2018.
“Property transactions look set to drift down slightly, although we do not expect house prices to fall, and net lending seems unlikely to get above £30bn next year.”
Despite this, Mr Smee said the housing market is relatively well insulated from direct Brexit effects as most activity is driven domestically, but he warned it is not immune from more general economic uncertainty.
He said: “We expect any modest strengthening in home-owner lending to be rather offset by a less active house purchase market in buy-to-let, as both tax and regulatory changes bite on landlords.”
The CML predicted the UK’s shortage of housing would not be addressed, with any increase in construction offset by fewer home-owners putting their houses on the market.
It has also published its gross lending figures for November, which were £21bn – up by 3 per cent on October and on the year before.
Jonathan Harris, director of mortgage broker Anderson Harris, said: "2016 has been a tricky year with challenges presented by high stamp duty costs and the referendum outcome, and uncertainty will continue into next year, coupled with the impending changes to mortgage interest tax relief for landlords which will have a negative impact on buy-to-let.
"It is hard to see any movement in interest rates and mortgage rates are likely to be fairly settled as well.
"We do not expect them to rise significantly next year - while economic news will impact Swap rate movements from time to time pushing up the cost of borrowing, overall we expect the mortgage market to tick along much as it has.
"Borrowers will continue to need good independent mortgage advice, particularly landlords as tax changes come in from April.
"The challenger banks will provide a vital role, supplying the most innovative products, assisting those who are particularly struggling to get funding, such as the self-employed, older borrowers and first-time buyers."