Despite monthly falls, gross mortgage lending in January was 21% higher than a year earlier and the highest January since 2008 at £25.2bn.
Figures from the CML showed that lending last year reached the highest level since the recession, with buy to let experiencing the highest yearly increase in both value and volume.
CML economist Mohammad Jamei, said lending in 2016 had started on ‘a positive note’.
“UK market fundamentals are helping to underpin this recovery, with real wage growth, an improving labour market, competitive mortgage deals, and government schemes all supporting household demand.
“We still only see limited upside potential going forwards, as the number of properties for sale on the market remains low and affordability pressures weigh on activity. Upcoming tax changes in the buy-to-let sector are adding an element of uncertainty to the market,” he added.
The delay in an expected interest rate rise has also increased confidence among homebuyers, industry experts said.
Interest rates were initially expected to rise at the beginning of 2016, with Bank of England governor Mark Carney predicting last year that they would increase at ‘the turn of the year’.
However, a future rate rise is now predicted to occur during the second half of the year at the earliest.
North London estate agent Jeremy Leaf added: “Perhaps surprisingly we are seeing just as many first-time buyers keen to take advantage of record low mortgage deals as investors trying to beat the Stamp Duty hike. The interest rate issue is prevailing over Stamp Duty hikes and other concerns: first-time buyers are saying that there are cheap mortgage rates now so they want to take advantage of them. The same may not be true in several months’ time so why wait?
“Surprisingly, what we have found is demand split roughly equally between investors keen to beat the 3% tax surcharge from April and first-time buyers wanting to take advantage of additional property choice and competitively-priced mortgages before interest rates start to rise.”
