Mortgage lending was up by 7 per cent in 2016, with first-time buyer activity particularly healthy, the Council of Mortgage Lenders has said.
Home buyers borrowed £127.7bn in 2016. This came to 698,900 loans, up 3 per cent on 2015.
First-time buyers borrowed £53.2bn for home-owner house purchase in 2016, up 13 per cent on 2015.
They borrowed more in 2016 than any other year since CML records began in 1974.
Remortgaging activity also reached historic levels following the Bank of England’s decision to lower interest rates in August, with activity up 14 per cent by volume and 20 per cent by value compared to 2015.
The number of remortgage loans was at its highest since 2009.
Gross buy-to-let also saw year-on-year increases, up 3 per cent by volume and 7 per cent by value.
Paul Smee, director general of the CML, said: “2016 could have been a potentially destabilising year of regulatory and political change, but the mortgage market has been resilient and adaptable.
“Home-owner house purchase lending increased, though the buy-to-let sector's positive lending performance has been driven primarily by remortgaging.
“We do not expect the market volumes to show a year-on-year increase in 2017 instead remain similar to that achieved in 2016.”
Strong activity among first-time buyers sustained the market at the end of last year, with remortgage and buy-to-let activity both down in December.
First-time buyers borrowed £5.1bn in December, up 9 per cent on November and 13 per cent on December 2015.
Meanwhile home-owner remortgage activity was down 21 per cent by volume and by value compared to November but was up 7 per cent on the same month in 2015.
Gross buy-to-let saw month-on-month decreases, down 15 per cent by volume and 7 per cent by value.
Year-on-year, the number of loans decreased 21 per cent and the value of these loans decreased 18 per cent.
While buy-to-let lending was down, of the three quarters after the stamp duty changes in April, gross quarterly lending was at its highest by volume and by value in the final quarter of 2016.
Nearly two thirds of buy-to-let loans were remortgages rather than house purchase.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “After a turbulent year politically, the mortgage market still managed to end the year on a strong note.
“That said, these figures highlight the supply and demand gap, which continues to support runaway house price inflation.
“For as long as demand outstrips supply, this trend will continue.”
damian.fantato@ft.com
