Massive remortgaging saw lending soar to a record £219bn last year – a 37 per cent leap from 2001's total of £161bn.
Figures from the Council of Mortgage Lenders reveal that £83.6bn, or 38 per cent, of 2002's total was for remortgages, a 67 per cent increase from £50bn in 2001.
Total lending for December was £19.5bn compared with £13.4bn in December 2001 but slightly down on November's figure of £20.6bn.
In December, loans for house purchase made up 54 per cent of the total, at £10.6bn, the same as in November, while remortgaging accounted for 39 per cent of the total at £7.6bn, down from £8.5bn in November.
The CML expects to see strong lending continuing well into the spring but predicts a slowdown in growth later in the year.
It says affordability is still at a positive level, with first-time buyers putting down an average deposit of 20 per cent deposit while movers are putting down deposits of at least a third of the value of the property.
Despite being relatively optimistic about the housing market this year, the CML is urging consumers to avoid borrowing up to the maximum limits and to put down a reasonable deposit.
Director general Michael Coogan says: “As expected, 2002 proved to be the strongest ever for mortgage lending. The conditions are in place for a soft landing for the market in 2003 but the market is not risk-free.”