Gross mortgage lending hit an all-time January high of £26.8bn, according to the latest figures from the Council of Mortgage Lenders.
Although the figure was down by 6% on the £28.5bn lent in December, it is up by 16% on the January 2006 figure of £23bn.
Michael Coogan, director general of the CML, says he expects the strength in mortgage lending to continue over the next few months, but what happens to it later in the year depends on what happens to interest rates.
Figures from the Building Societies Association (BSA) reveal building society gross advances were £4.1bn in January 2007, compared to £3.2bn in January 2006.
Mortgage approvals were £4.2bn in January, up from £2.9bn the previous year, while net advances were £1.2bn in January, compared to £719m in January 2006.
Andrew Gall, business economist at the BSA, says lending and approvals were the highest January figures on record, but elsewhere there have been signs of a cooling housing market.
He adds: “In January, Nationwide Building Society reported the lowest monthly growth in house prices for eight months. However, indications of a slowing market are not coming through in building society mortgage figures yet. This is a reflection of the strong numbers of loans promised but not processed, seen at the end of last year.”
Gall says robust mortgage figures may continue in the near future, but he expects these to fall back as the impact of recent rate rises feeds through.
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