Mortgage lending boomed last month, breaking with the usual seasonal pattern of a slowdown in all housing market activity towards the end of the year.
Home-buyers borrowed £28.5 billion in November, five per cent more than in October and only one per cent short of the all-time record reached in July, 2004, according to the Council of Mortgage Lenders speaking for both banks and building societies.
The CML interpreted this as a reflection of a steady recovery in the housing market over the past year.
But re-mortgaging was also an important factor. the Bank of England has reported record totals for mortgages approved, but not yet paid out, in recent months. These have been driven by rising numbers of home-buyers seeking new deals as their fixed rate packages matured.
The British Bankers' Association, speaking for the big British banks, confirmed this rising trend in approvals.
"The housing and mortgage markets have clearly strengthened," said Michael Coogan, the CML's director general. "There have been upward trends in gross mortgage lending and approvals and more stable house prices in recent months.
"While it would be tempting to assume this strengthening will continue, our expectation for the coming year is of relatively subdued transaction levels, mortgage lending moderating a little from recent levels and house prices rising by about two per cent.
"Affordability pressures will persist for first-time buyers and aspirational house-moving is likely to appear unattractive compared to home improvement."
Allowing for repayments, the BBA said the banks' underlying mortgage lending rose by £5.1 billion in November, more than in any month since the housing market peaked in July last year, and well ahead of both the £4.3 billion increase in mortgage lending in October and an average of about £4.4 billion over the last six months.
Banks, building societies and specialist lenders together now have 11.6 million mortgages worth some £942 billion outstanding in the UK.
The Building Societies Association, reported a slight fall in the value of new mortgages approved by its members in November. This eased back to £4.051 billion from £4.148 billion in October -indicating some moderation of the recent trend, although that that total was still well ahead of mortgages worth £3.055 billion approved in November last year.
Adrian Coles, director general of the BSA commented "The housing market has clearly recovered from the effects of the sharp increase in interest rates."
The International Monetary Fund, which has warned repeatedly that the housing market posed a potential threat to the entire British economy, is moving towards a similar conclusion.
In its annual update on the British economy it said that the risk of an abrupt adjustment has lessened.
Most City analysts now accept that the housing market has accomplished the "soft landing" that pessimists among them regarded as allbut impossible this time last year. ..SUPL: