Gross mortgage lending across the whole market rose to £20.2bn in December – up 1.2% compared to the same month in 2016.
The figures from UK Finance showed a strong end to the year despite the typical December blip when activity usually falls.
However, activity through the biggest high street lenders was down. Approvals for house purchase, remortgaging and other secured lending all slipped compared to December 2016, according to the data.
High street lenders approved 21% fewer house purchase loans, 14.6% fewer remortgages and 2.2% fewer other secured loans.
IRESS principal mortgage consultant Henry Woodcock believed the data was generally positive.
“The market did not expect to see an increase in gross mortgage lending for December so this is welcome news,” he said.
“Mortgage approvals had been declining through the last quarter of 2017 and although approvals edged up to just over 65,000 in November, that was still 3,000 fewer than in November 2016.
“However, January usually sees a significant rise in approvals and industry sentiment among lenders and mortgage brokers is positive, with UK Finance forecasting a moderate increase in housing transactions and gross lending.
“I don’t expect a bumper year for gross mortgage lending,” he added.
SPF Private Clients chief executive Mark Harris said: “The number of first-time buyers continues to be strong, which is excellent news for the overall health of the market.
“Government initiatives, coupled with lenders’ efforts to lend at higher loan-to-values at competitive rates, are proving attractive to those trying to get on the ladder for the first time.
“There is much speculation as to when interest rates will rise again but lenders remain keen to lend and there is more money available than people ready to borrow it, which will keep mortgage rates low at least for now.”
Credit card use slows
Rising credit card spending was a concern through all of 2017, however despite the Christmas season this slowed to a 5.3% increase in outstanding credit.
UK Finance managing director of personal finance Eric Leenders said: “December is traditionally a quieter month for mortgages, although the underlying trend of increased numbers of first time buyers, supported by government initiatives such as Help to Buy, continues.
“Mortgage rates remain low, driven by a competitive market, so customers should shop around for the best deals.”