January gross mortgage lending up 33pc year-on-year

CML chief economist Bob Pannell said: "Housing market indicators in the UK continue to be positive, although seasonal factors are likely to have affected activity levels. Monthly approvals for house purchase averaged 70,000 in the final quarter of 2013, the strongest for six years.

“The Bank of England envisages that approvals may climb to 90,000 a month in the second and third quarters of 2014. This would seem to imply property transactions running at an annualised rate of one and a half million or so. We think this may be over-optimistic given the growing anecdotal reports of a shortage of prospective sellers."

Henry Woodcock, principle mortgage consultant, IRESS, said: “This minor monthly blip in mortgage lending does not paint the full picture of the market at the moment, and lenders have been doing a brisk business in the first six weeks of the year compared to last year.

“First-time buyer demand has provided the building blocks for a strong mortgage market, with government initiatives such as Help to Buy playing their part. With Mark Carney unlikely to raise rates in the near future, mortgage rates shouldn’t sky-rocket in the short-term, and demand for finance is unlikely to crumble any time soon.

“However, despite the progress we have seen, we expect the market to hit a speed bump in the second quarter this year as lenders and borrowers alike come to terms with new regulations post MMR, when the process of securing a mortgage will lengthen and become more complex. More detailed affordability testing will increase the chance of applications being declined initially. How lenders, brokers and consumers come to terms with the changes in April may be the making or breaking of the market in 2014.”

Ashley Brown, managing director, independent mortgage brokers Moneysprite, added: "What a difference a year makes.

"First time buyers are back with a vengeance and lenders are interested in higher LTV customers again. You can feel more confidence amongst buyers.

"The market has opened up to buyers with small deposits, thanks in no small part to the Government's Help to Buy scheme.

"And with more competition amongst lenders for customers across the board, this should hopefully mean that mortgage rates will remain low for a while.

"The question of course will be, what will happen when Help to Buy comes to an end.

"And we can't ignore the problem surrounding low property stock levels which is creating a bottleneck of frustrated buyers.

"There is still a severe lack of new properties coming onto the market, especially in London, and many buyers who are in a position to purchase, have little option than to sit on their hands and wait patiently."

David Brown, commercial director of LSL Property Services, said: “Lending is still growing at a tremendous annual rate – and this now appears to be sustainable. January may have been quieter than December, but last month is definitely on track given the usual seasonal dip we see at this time of year. Ahead of the Mortgage Market Review we could still see an extra short-term rush in the next few months – but for now the mortgage market is on a steady trajectory gaining altitude.

“For potential first time buyers every month like January is another where the chances could get slightly better for the right deal on the right property. But there are still serious headwinds for new buyers – and a huge backlog of competition. At some point this year, wages could start to really pick up. Growing salaries combined with a rejuvenated mortgage market could be the formula needed to really make a lasting difference for first time buyers. And in the meantime those still renting are enjoying slower rent rises as they do their utmost to build a deposit. More mortgages for landlords are proving useful, and the private rented sector is still expecting to withstand even more strain from rampant demand in 2014.”

And Duncan Kreeger, director of West One Loans, said: “The mortgage market is steaming ahead like a freight train – but it can only go so far before the track runs out. Of course more mortgages are excellent news, but there simply aren’t enough houses on the market to satisfy demand. In the end this just leads to rising house prices, nervous sellers and queues of frustrated buyers.

“To really supply more homes at cheaper prices, the housing market needs more imaginative finance. Of course we need more new build developments, but to put new property in places where people really want it, we also need widespread property conversions and refurbishments – and it’s almost impossible to get mainstream funding for these types of projects. Alternative finance is working hard to fill this gap, but the old 20th century model of finance is still holding us back. Sooner or later this will put the brakes on the UK housing market.”