Mortgage lending increased by an estimated £2bn to £143bn during 2012 amid recent signs of improved confidence in the property market, an industry body said.
The Council of Mortgage Lenders (CML) expects the figure for this year to reach £156bn, despite a dip last month when £11.7bn was lent, compared with £12.7bn in November and £12.2bn for the same month a year earlier.
CML chief economist Bob Pannell said: "We are more positive about the UK housing market and wider economy than a year ago, despite economic headwinds and downside risks."
He added that lenders now faced fewer funding pressures, in part as a result of the Bank of England's and Treasury's Funding for Lending scheme.
The CML said market activity was robust in the final quarter of 2012, helped by better mortgage availability and pricing - a trend it expects to continue in the coming months.
For most months in 2012, house purchase lending was above year-earlier levels, while first-time buyer activity accounted for an unusually large 41% of all house purchase loans in December for the second month in a row.
Despite the Funding for Lending initiative, separate figures yesterday from the Bank of England showed a further contraction in lending to businesses, down by £4bn on a year ago in the three months to November.
The Bank said this was likely to reflect the desire of firms to pay down debt as quickly as possible, while major lenders have indicated that they expect lending to small and medium-sized firms to increase slightly in 2013.
Matthew Fell, CBI director for competitive markets, said: "Weaker demand for finance among small and medium-sized businesses indicates that they are still lacking confidence to invest, so raising awareness of available schemes is crucial."