It estimates that gross lending overall will peak this year at £316bn, up 31% on 2020, then moderate to £281bn in 2022, before increasing to £313bn in 2023

Total house purchase transactions (including cash purchases) will reach 1.5 million in 2021, some 47% higher than 2020 and, in fact, the highest number since before the Global Financial Crisis.

UK Finance says the main driver of lending in 2021 will be for house purchase, (£200bn, up 53% on 2020), whereas homeowner remortgaging activity will be slightly down on last year at £62bn.

Buy-to-let activity has followed a similar path to the residential sector, with purchase activity increasing to £18bn, up 83% on 2020.

While the 2022 and 2023 gross lending figures will be reductions on the 2021 peak, notably they are higher than the 2020 and 2019 figures and represent a return to more stable levels of activity.

James Tatch, principal, data and research at UK Finance, said: “2021 has been a record year for mortgage lending amid the stamp duty holiday and homeworkers moving from cities. The outlook for the housing and mortgage markets over the next two years is for a return to more stable, balanced picture following the upheavals of the last two years.

“While risks remain, both to new lending and ongoing affordability, the market looks to be emerging from the pandemic in a better place than previously anticipated, supported by a much-improved wider economic outlook.”