Mortgage lending rose by nearly 5% in February compared to the same month a year earlier, with buyers rushing to take advantage of current low rates ahead of a possible rate rise in May.
Although the Bank of England's Monetary Policy Committee chose to hold interest rates at 0.50% in April, there is growing speculation that May will see rates increase for the first time since last November.
Remortgage approvals also increased in February, by over 9% in both number and value compared to the same month the previous year.
"There has been an increase in remortgage approvals compared to last year, as borrowers look to lock into attractive deals amid speculation of further interest rate rises later this year," said Eric Leenders, personal finance managing director at UK Finance.
Growth set to continueMortgage lending will rise for the eighth consecutive year in 2018 to reach its highest level since 2007, according to latest forecasts from the Intermediary Mortgage Lenders Association (IMLA).
The Association's fifth annual market review and forecast, says that remortgaging underpinned by intense competition, along with falling inflation, continues to drive growth despite Brexit uncertainty. Challenges remain however, due to a lack of properties and obstacles to first-time buyers and those moving up the property ladder.
This year and next are also likely to see a recovery in the Buy to Let market, IMLA said, despite several recent tax changes that have affected landlords.
Changing demographicsThe average age of a homeowner in the UK is now 57, up from 52 in 1996, according to IMLA's research, a much faster increase than the rate of ageing across the UK population as a whole.
In 1996, 62% of all homeowners were aged 45 or above, but this increased to 76% in 2016. Many older homeowners have already paid off their mortgages, and increasingly are choosing to stay put for longer. The average UK household now moves once every 19.2 years, IMLA said compared to once every 7.4 years when housing transactions peaked 30 years ago.
The number of people taking their second step on the property ladder is down 42% since 2007, with 377,200 people moving from their first homes last year. Many people are struggling to meet stricter mortgage affordability criteria on bigger homes.
"We are witnessing a step-change in the market, as the shifting demographics of homeownership and the housing supply shortage create a structural break with what has been the norm," said Kate Davies, executive director of IMLA. "Despite the recovery of the housing market and the availability of mortgage finance since the last recession, stricter affordability rules are limiting activity by those who would otherwise be highly leveraged. People are moving less often - whether by choice or constraint."
However, the number of first-time buyers has risen in recent years to reach 366,000 in 2017. First-time buyers have been helped by government schemes such as Help to Buy, as well as the 'Bank of Mum and Dad' helping to supplement deposits.