Gross lending in November was around £12.9 billion, according to estimates from the Council of Mortgage Lenders (CML).

The lender body also says that there are grounds for optimism that the market recovery which began this year should continue next year, reinforced in part by Funding for Lending scheme effects.

This time last year, the CML had forecast that 2012 would see 825,000 property transactions, £133 billion of gross lending, and £8 billion of net lending.

In reality, activity was stronger than it expected, and it now expects to end 2012 at 930,000 transactions, £144 billion of gross lending and £9 billion of net lending.

The CML’s central forecast is for 950,000 property transactions, £156 billion of gross lending, and £12 billion of net lending in 2013, falling back a little in 2014 after the FLS drawdown window ends to 930,000, £150 billion and £11 billion respectively.

“Whereas the FLS was conceived by the UK authorities to mitigate the worst impacts of a potential fresh credit crunch, its launch has in fact coincided with a more positive external funding environment, in part due to European Central Bank actions,” said CML chief economist Bob Pannell.

“Given this more benign context, 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.”

Mortgage arrears have been lower than originally forecast for 2012, and the number of repossessions is likely to end the end year at 35,000, some 10,000 lower than forecast. The CML’s central forecast is for 35,000 repossessions in 2013 and 37,000 in 2014.

Mark Harris, chief executive of SPF Private Clients, added: “Record low interest rates have resulted in some of the cheapest mortgages ever seen so it is no surprise that lending volumes are slowly ticking up month by month and that the year has seen stronger lending volumes than initially forecast.

“However, the biggest barrier to home ownership remains the deposit as first-time buyers struggle to drum up the tens of thousands of pounds required to get on the housing ladder. Funding for Lending should make this easier next year, resulting in more choice at higher LTVs and better rates. It is no overnight solution but a slow burner, yet early signs are encouraging.

“It is worth remembering though that while rates may fall, criteria are likely to remain tight so meeting these could still be an issue for many borrowers and will keep growth in the market in check next year.”