Mortgage lending increased year-on-year for the fifth month in a row in December, a trade association said, but prospects for the year ahead are 'difficult to call'.
Gross mortgage lending in December was an estimated £11.7bn, the Council of Mortgage Lenders (CML) said, which is a 12% drop from November but a 12% rise from the previous December.
This means mortgage lending for the whole of 2011 came in above the CML forecast at £140bn, up 3% from £136bn in 2010.
CML chief economist Bob Pannell said: "Continuing eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call."
The drop in lending between November and December was amplified by the smaller number of working days in the month, the CML added.
Lending was up 11% year on year in the final quarter at £37.3bn, the association added.
The CML reported a pick-up in lending in November as the number of homeowners taking up fixed-rate deals hit the highest level in more than two years.
Mortgage providers have cut rates on fixed-rate mortgages.