January mortgage lending reached its highest total since 2008 this year with £18.9bn of lending.
This was still 6% lower than December’s lending total of £20bn but 2% higher than January last year.
Mohammad Jamei, CML economist, said: “Overall mortgage lending continues to hold up pretty well, but we seem to have a twin-track market.
“Weakness in buy-to-let and home movers has been offset by an increase in first-time buyers and remortgage lending.
“A continuing acute shortage of homes being offered for sale is one aspect of a broken housing market, that looks unlikely to resolve in the near term.”
Andrew McPhillips, chief economist at Yorkshire Building Society, attributed the strong figures to growing remortgage activity.
He said: “This annual growth in mortgage lending was most likely driven by an increase in the number of people remortgaging to better rates, offsetting the impact of a fall in property transactions.
“Affordability constraints, caused by increasing house prices, the cost of stamp duty and rising inflation, are still hindering the market by limiting the number of people who can afford a property. These increasing costs are making homeownership a more distant dream for many.
“In order to make homes more affordable, the government should implement measures to ease pressures for potential buyers and build enough affordable housing and infrastructure to tackle the supply crisis.
“The government should also consider introducing measures to ease affordability pressures in the short-term, such as by changing stamp duty to a seller’s tax rather than a buyer’s tax.”
Ishaan Malhi, chief executive and founder of online mortgage broker Trussle, reckoned this spike in remortgage activity will continue in 2017.
He said: “It’s my view that remortgaging levels will keep rising for two reasons.
“Firstly, there are currently three million people in the UK paying over the odds on a standard variable rate mortgage, and awareness among this group is gradually growing.
“Secondly, the mortgage switching process is becoming faster and easier for people to access online and at their own convenience, and this will naturally lead to greater engagement.”
Simon Checkley, managing director at mortgage broker Private Finance, reckoned first-time buyers have also played a significant role in the strong January.
He said: “The current market is formed of two contrasting halves: first-time buyer and remortgage activity continues to thrive thanks to record low interest rates and strong buyer demand.”
But he added: “At the same time, buy-to-let and home mover activity – still suffering the effects of the stamp duty surcharge and tougher affordability criteria – is lagging behind.
“Strong mortgage lending cannot mask the fact that our housing market is, by the government’s own admission, broken.
“Lack of property supply continues to be a concern and is contributing to rising housing costs. There has also been a notable slowdown at the upper end of the housing market.
“While addressing this is unlikely to score any political points, transactions must flow across the entire market for it to be healthy.
“Buy-to-let lending is struggling, and upcoming tax changes will test the market further. Wealthier landlords – particularly those able to buy outright – will reap the rewards thanks to high demand and limited rental supply.
“But smaller investors are likely to struggle: this can only spell bad news for renters, ironically at a time when the government is increasingly shifting the focus away from homeownership.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said the figures set a precedent for the rest of the year.
He added: “These numbers confirm that as gross mortgage lending continues to rise annually, it is still very much business as usual in the mortgage market, despite the economic uncertainty that characterised most of last year.
“The start of the New Year has seen positive sentiment across the mortgage market, however an acknowledgment that the market still faces challenges – particularly in the buy-to-let sector.
“The government’s commitment to help build the hundreds of thousands of more affordable homes that our nation needs will further improve the diversity and inclusivity of our housing market, but is unlikely to impact 2017 directly.”