The number of approvals for remortgaging decreased to 31,952 from the previous six-month average of 33,039.
Gross lending secured on dwellings was £12.8bn in January, up 5.8% on the previous six-month average of £12.1bn.
Repayments in January were £11.7bn compared to the previous six-month average of £11.5bn.
Richard Sexton, director of e.surv chartered surveyors, said: “The mortgage market is not fighting fit but it’s certainly soldiering on.
“Deposit requirements have fallen to their lowest since the Lehman collapse and more first-time buyers are getting mortgages. But we can’t give it a clean bill of health.
“Tighter funding conditions lurk on the horizon and will constrict lending in the medium term. What’s more, the current lending figures are being artificially swollen by first-time buyers rushing to beat the stamp duty deadline.”
Sexton added that the Bank of England’s figures didn’t offer a true reflection of the state of the market which was riddled with all manner of ailments.
He said: “If the end of the tax break for new buyers coincides with a deterioration in the economy, the first-time buyer market will seize up again and may well enter a state of rigor mortis.
“The landscape for the remainder of 2012 looks fraught with risk – it will be difficult for the market to navigate.”
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “With inflation falling and greater availability of competitive products, more and more consumers are deciding they have waited long enough to – either purchase their first home or take the next step on the housing ladder.
“Today’s Bank of England Figures show this return to cautious optimism as well as the impact of the looming end to the stamp duty exemption period.
“Today’s news is welcome but with the Stamp Duty Exemption due to cease in a matter of weeks this may bring about something of a hiatus in activity for a period.”
David Brown, commercial director of LSL Property Services, said: “By pre-crunch standards, the level of mortgage lending in January was not spectacular by any means.
“But given the context of the current economic conditions and the ongoing eurozone crisis, a 7% monthly increase in house purchase lending is a welcome sign of a strengthening mortgage market.
“The flurry of first-time buyers rushing to complete before the end of the stamp duty holiday will have played a part but any increase in mortgage lending is also a demonstration of confidence in the market from lenders.”
Brown added that the slim prospects of any bank rate rise in the foreseeable future and dipping Libor rates should help keep down mortgage rates on new products.
He said: “As a result the record affordability will continue to drive demand from both credit-worthy buyers and investors looking to take advantage of the favourable conditions in the rental market.”
