Gross mortgage lending jumped 8% in 2015 to hit a better-than-forecast total of £220.3 billion.
Lending in December totalled £19.9 billion, up 23% on the same month last year when lending totalled £16.2 billion.
But it marked a 3% dip on November’s £20.5 billion, according to new figures from the Council of Mortgage Lenders.
CML economist Mohammad Jamei said 2015 saw the highest annual gross lending figure since 2008.
“The low inflation environment, along with real wage growth, an improving labour market and competitive mortgage deals have all helped to underpin demand.”
But he warned that upside potential now looks limited as the supply of existing and new properties on the market remains weak, and affordability pressures weigh on activity.
“There is an added element of uncertainty as we wait to see the impact of tax changes on the buy-to-let sector.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the mortgage market ended 2015 on a high.
“Cheap mortgage rates, challenger banks keen to lend and schemes aimed at helping first-time buyers onto the ladder have all helped create a buoyant market.
“With Mark Carney stating this week that ‘now is not yet the time to raise interest rates’ confidence is set to continue.”
Harris said 2015 was a busy year for brokers as tougher mortgage rules made it trickier to get finance. “Affordability constraints will continue to hold some people back on the lending front this year.”
Jeremy Duncombe, director, Legal & General Mortgage Club, expected another strong year in 2016.
“That said, the number of transactions has remained relatively flat throughout the year as a result of the lack of available housing stock for buyers.
“This is contrary to the increases we are seeing in lending, showing that this strong performance is being driven in part by escalating house prices as people are having to take out larger loans to secure a property.”