Gross lending last month reached the same levels seen at the beginning of 2007, according to the Council of Mortgage Lenders (CML).
The latest CML figures show gross lending rose to £26.5bn in January, up 11% from £23.9bn in December.
The figure is just short of lending levels seen at the beginning of 2007, when £26.6bn was lent to homebuyers.
The CML says the market has held up well given the impact of the credit crunch and the fall of Northern Rock.
However, the CML still expects gross lending volumes to be lower in the coming months due to a fall in mortgage approvals towards the end of 2007.
“Gross lending held up well in January. However, there is considerable uncertainty in the housing market at the moment and we expect lending volumes to be lower in the coming months,” says Michael Coogan, director of the CML.
Coogan predicts demand for remortgages will be stronger than demand for house purchase, and called on the Government to step in and revitalise the market.
“Home buyers might be more inclined to transact if their moving costs were reduced and the government has the opportunity to address this by raising stamp duty thresholds and cutting the rates of stamp duty in next month’s Budget,” he explains.
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