Fears of a pre-election property market slowdown have subsided with news that gross mortgage lending grew 21% in March to £16.5 billion.
That is also 7% higher than March last year, according to latest statistics from the Council of Mortgage Lenders.
Despite the strong monthly figure, slow growth across January and February has left quarterly lending down 12% compared to the last three months of 2014, and 3% year-on-year.
CML chief economist Bob Pannell said sentiment and activity are showing signs of improvement, and should be further supported by the effects of stamp duty reform. "We expect to see lending strengthen over the next few months, albeit from a relatively sluggish start in 2015."
Jonathan Harris, director of mortgage broker Anderson Harris, said the mainstream market remains largely unaffected by the uncertainty created by the general election, while the upper end takes a breather.
Record low mortgages have kept the market moving. "The vast majority of borrowers are opting for fixed rates to give them some certainty and with lenders reducing those further in recent weeks, we are seeing the cheapest deals in a generation."
Harris said buy-to-let is the real lending success story, as lenders launch new deals, cut rates and relax criteria. "While lenders abandoned the market in their droves after the onset of the financial crisis, they are well and truly back, and with pension freedoms introduced this month, many are sensing further opportunities.'
Jeremy Duncombe, director, Legal & General Mortgage Club and Housing, expected the lending recovery to continue. "The combination of low interest rates, low inflation and stamp duty reduction should stimulate demand for new homes, particularly once uncertainty around the General Election is resolved."
L&G has seen a 12% increase in lending this year as its brokers adapt to mortgage regulation, he said.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said CML figures showed that housing activity is back on track. "The fall in February was not unexpected given the seasonal slowdown, but it is encouraging to see that lending has risen 21% over the month to stand 7% higher than in March 2014.
"Particularly as the first half of 2014 was exceptionally strong relative to the previous two to three years."
There was appetite for lending despite the upcoming election and consumer demand has remained strong, he said. "Mortgage rates continue to fall, and the latest sub-2% five year fixed mortgage suggests even better deals are yet to come."
New figures from HM Revenue & Customs show the number of housing transactions rose above 100,000 for the first time in four months in March, and Murphy said: "This should have a knock-on effect on mortgage completions, leading to further growth.
"However, with housebuilding levels still trailing behind consumer demand, long-term growth could be stunted if this imbalance is not addressed."
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