House sales are set to pick up next year amid the surprising resilience of the market, lenders have predicted.
The Council of Mortgage Lenders (CML) issued its market forecast as it reported that gross mortgage lending rose to its highest level in a year in November, with £12.9 billion in loans advanced.
The CML said that market activity had been stronger than expected and around 930,000 transactions would have taken place by the end of the year, with £144 billion worth of loans advanced.
Market activity is set to increase further next year, with around 950,000 sales taking place and £156 billion worth of mortgages advanced, the CML predicted. First-time buyer numbers were likely to top 200,000 in 2012, touching their highest level since 2007, and this may well be surpassed next year by a small margin, the CML said.
The body said that a multibillion-pound Government scheme to boost lending had been a significant factor in its forecasts, prompting better credit availability and lower mortgage rates which should help to stimulate activity in 2013.
The number of mortgages on the market has already increased by a fifth since the Funding For Lending Scheme (FLS) was launched in August and several lenders have slashed their rates.
The initiative, which gives lenders access to cheap finance, is running for 18 months. But the time frame for the scheme means that some activity could be bunched up next year, possibly causing a small dip in sales in 2014, the lending body said.
It added: "As with other time-limited measures, the FLS has the potential to bring forward some activity into 2013, resulting in a possible modest dip the following year."
Transactions are predicted to fall slightly in 2014, with 930,000 sales taking place and gross lending amounting to £150 billion. The CML also cautioned that demand for mortgages could be held back by the weakness of the economy and much would hinge on the continued resilience of UK employment.
CML chief economist Bob Pannell said: "In our view, the FLS now has the potential to underpin a modest pick-up in mortgage lending activity. A key test, however, will be the extent to which greater borrower appetite materialises in response to better credit availability."