Net mortgage borrowing remained at £5.2bn in January, according to the Bank of England’s Money and Credit statistics for January 2021.
This is up from the monthly average of £4bn in the six months to February 2020.
The statistics also show that there were 99,000 mortgage approvals for house purchase in January, in line with the average of 100,000 since October 2020.
In addition, effective interest rates on new mortgage borrowing fell to 1.85% in the first month of the year.
That is in line with the rate in January 2020, and compares with a series low of 1.72% in August 2020.
The rate on the outstanding stock of mortgages fell to 2.09% which is a new series low.
David Whittaker, chief executive of Keystone Property Finance, said: “Today’s statistics show that the housing market remained resilient as the New Year kicked off, with demand for property continuing to rise as people take advantage of low interest rates and the stamp duty holiday.
“However, it’s clear that mortgage transactions are beginning to slow as the impact of the third national lockdown on consumer confidence and uncertainty about the future of the stamp duty holiday takes hold.
“In addition, while demand for property has remained strong, data shows that the supply of new property has decreased since the beginning of the year.
“As well as navigating this unprecedented market, buy-to-let borrowers have an added challenge of dealing with recent and upcoming regulatory changes.
“As such, the value of advice for landlords cannot be understated.
“The role of mortgage brokers has never been more important in helping landlords understand this shifting landscape and find the right mortgage for them and their individual circumstances.”
Joshua Elash, director of property lender MT Finance, added: “There is an astounding level of liquidity in the market at a time when the economy itself is in a state of partial paralysis. It is unusual and feels dysfunctional.
“Consumer borrowing is down, as lockdown continues to bite into people’s ability to go out, shop, and enjoy the things in life we usually take for granted.
“This new reality has meant that households continue to deposit savings at remarkable levels, given that interest rates are at historically low levels.
“Net mortgage borrowing is also robust, encouraged by the stamp duty holiday and effective interest rates as low as 1.85%.
“With the Chancellor rumoured to be rolling out a mortgage guarantee scheme, which will see the return of higher loan-to-value deals, this trend will continue, leading to serious inflation in property prices.”
Islay Robinson, group chief executive of Enness Global Mortgages, said: “These latest mortgage approval numbers highlight a market at its most buoyant in the month of January since before the financial crisis of thirteen years ago.
“Activity is far higher than normal levels and this has no doubt been driven by the current stamp duty holiday.
“Homebuyers are shrugging off any fears of a pandemic property decline in their rush to secure a stamp duty free purchase.
“This frenzy looks likely to continue until summer, given Rishi Sunak’s potential pending announcement of an extension via Wednesday’s budget.
“The question for sellers, estate agents and mortgage brokers is, ‘what happens once the levy is reinstated?’
“We may be about to take a step back from the cliff-edge should the stamp duty holiday be extended.
“However, this is only prolonging the inevitable and, if anything, will only steepen the gradient of any potential market decline.
“We should perhaps make the best of these ‘sunny days’ whilst we can before another stamp duty deadline countdown leaves us teetering on the edge once again.”
Iain McKenzie, chief executive of the guild of property professionals, added: “Despite January traditionally being a slower month for purchasing a home, these figures show the stampede to buy property before the stamp duty holiday ends.
“It is good news for the wider economy that there is still interest in moving up the property ladder and consumer confidence in mortgages is still robust.
“Consumers are also repaying debts at an incredible rate, which can be partly ascribed to the savings that many employees are making by working from home.
“However, this could also indicate a lack of confidence in how the economy will fare this year, as people are choosing to pay down debts rather than spending the extra cash.
“Interest rates on mortgages are some of the lowest we’ve seen in a long time, and this could be another strong year for the housing market.”