In 2016 mortgage lending totalled £246bn – a 12% increase from 2015’s figure of £220bn according to the Council of Mortgage Lenders.
In December 2016 lending fell by 4% from November but was still 4% higher than December 2015.
Mohammad Jamei, CML senior economist, said: “The UK housing market, much like the wider UK economy, ended 2016 on a generally positive note.
“Approvals for house purchase have recovered strongly of late, and this should feed through to lending figures in the early months of 2017.
“The current availability of mortgage credit is benign, and the real issue continues to be a dearth of properties on the market, which adds to the challenges facing would-be buyers.
“Uncertainty associated with political factors and prospective changes to the tax treatment of landlords will weigh on prospects for the year ahead.”
It should be noted that such figures could be skewed by the lack of transparency around product transfer business.
John Eastgate, sales and marketing director of OneSavings Bank, owner of Kent Reliance, Interbay Commercial and Prestige Finance, said: “The mortgage market has blown hot and cold over the last 12 months, as borrower sentiment has been impacted by economic uncertainty both before and after the EU referendum, although some of the lowest mortgage rates in history have helped to maintain demand.
“December’s dip in lending activity could be explained by a traditional seasonal slowdown and it would be wrong to conclude too much from it.”
He added: “Looking ahead, activity in the mortgage market is expected to grow in 2017, but this growth will likely be more subdued than last year.
“Consumer confidence remains fragile, buy-to-let landlords are coming to terms with greater regulation, aspiring homeowners face greater affordability pressures, and homeowners are likely to lock into longer term fixed rates which could see more subdued lending figures toward the end of the year.
“Taken together, overall conditions are supportive of sustainable growth in gross mortgage lending, but we’re unlikely to be seeing the peaks and troughs of 2016.”
Paul Smith, chief executive of haart estate agents, expects a strong start to 2017.
He said: “The surge of housing purchase approvals seen in December suggests the New Year should be off to a flying start, so long as the industry does not get run off track by being bogged down with the ins and outs of Brexit negotiations.
“The upcoming Housing White Paper has the potential to uplift this, however the bungling over its release date does not inspire much confidence that we’re on the cusp of a homeownership revolution.
“It is crucial that we see greater government incentives for housebuilders to build the right type of housing, and for older people to downsize their family homes.
“Only then will we see the level of fluidity in the market needed to combat a growing population and a lack of supply.”
In 2016 the buy-to-let market had to cope with the 3% stamp duty surcharge introduced in April and promises of stress tests from the Prudential Regulation Authority in January 2017 and a reduction in buy-to-let tax relief in April 2017.
Steve Olejnik, chief operating officer of Mortgages for Business, reckoned buy-to-let’s share of the market fell last year – and that will only continue.
He said: “We estimate that 2016’s total level of gross buy-to-let lending will stand at around £40bn.
“This would put the sector’s share of lending at around 16% of 2016’s total, down from around 18% a year earlier, which is a realisation of policymakers’ plans to level the playing field between first time buyers and landlords.
“Buy-to-let’s share will reduce further, and we believe that 15% is a healthy and sustainable level for the sector.”
Henry Woodcock, principal mortgage consultant at IRESS, agrees that buy-to-let will take a hit in 2017. He said:
“Overall the market in 2017 is likely to be dampened by uncertainties around the economy and buy-to-let lending levels are expected to be lower as further tax changes take effect.”
But as detailed by Mark Harris, chief executive of mortgage broker SPF Private Clients, as buy-to-let activity fell remortgage activity swelled.
He said: “Record low mortgage rates were responsible for this resilience, with many borrowers remortgaging to take advantage of the lowest rates ever while first-time buyers were able to take advantage of an increase in the number of high loan-to-value deals.
“2016 turned out to be an encouraging year for the mortgage market, despite significant headwinds created by the increase in stamp duty for landlords and second homeowners in April and the uncertainty surrounding the referendum.”