The report said falling inflation is likely to boost consumer spending, falling unemployment figures are a sign of recovery and trade data show rising exports.
While purchase volumes were strong in first half up 7%, AMI predicts that the second half is likely to be more subdued.
AMI chief executive Robert Sinclair said: "Despite the positive numbers on gross lending for the first six months of the year, up 6.8%, this is unlikely to be sustained in the second half so we are erring to the lower end of our £130bn to £140bn forecast."
Remortgage lending fell 7% year on year as last year’s volumes were boosted by fears of rate rises.
The broker trade body also highlighted research by the Joseph Rowntree Foundation which predicts that by 2020 the number of home owners under the age of 30 will fall to 1.3 million "a staggering drop of 46%".
The report said: "Even more worrying government data indicate that the quantity of affordable homes under construction fell by 68% between 2011 and 2012, coining the term ‘generation rent’, with young people being unable to step onto the property ladder."
Housing starts remain very subdued as housebuilders worry about demand and about how to finance their projects. Annual housing starts totalled 104,970 in the 12 months to March 2012, down by 6% compared with the 12 months to March 2011.
Annual housing completions in England rose reaching 117,870 in the 12 months to March 2012, an increase of 6% compared with the 12 months to March 2011. This is still far below the rate of household formation.
Overall AMI said given falling inflation and lower unemployment the economy does look in better shape now than it has for some time but it remains to be seen whether the positive signs translate into growth.
Sinclair said: “The improving unemployment figures and the strengthening balance of trade indicates a healthier economy than the GDP figures and most commentators will acknowledge.
"There is a need however for more government spending on capital projects such as the Midland Mainline electrification and the incentives for new-build properties to promote growth. The significant cash piles accrued by UK industry (£745bn) could be invested, but with continuing uncertainty in the Eurozone this looks unlikely in the near term.
"Barclays recent study indicating that owning a home rather than renting will save £194,000 over a 50 year period, shows why the housing ladder is still attractive. Being credit-worthy and gathering a deposit given current rental levels is the big challenge.
"However with competitive products still coming to the market place, an appetite to lend is still there from many lenders. All markets remain challenging, with new buyer registrations slipping back with many agents blaming a lack of quality properties on their books.”
