Data released by the Council of Mortgage Lenders showed gross lending reached £17.5bn in June, the second full month after the new rules reached the market.

This figure was 4% higher than May (£16.8bn) and represents a 17% increase on June 2013’s figure of £14.9bn. The CML said this was the highest monthly figure since October last year when £17.6bn was completed.

In total, gross mortgage lending for the second quarter of this year was an estimated £50.8bn. This is a 21% increase on the second quarter of 2013 when lending totalled £41.9bn.

Henry Woodcock, principle mortgage consultant at IRESS, said the market was levelling off following the introduction of the MMR on April 26.

“Faint signs that the rapid growth in the mortgage market is starting to peter out are becoming clearer,” he said. “The market is still readjusting to the combination of tougher affordability checks and increased levels of red tape brought by the MMR.

“On top of this, while the prospect of rising house prices is attracting many to the benefits of homeownership, it is also making it more difficult for those with the smallest deposits to get their foot on the property ladder.

“That’s not to say lending will fall off a cliff by any means. There is still a strong appetite from buyers, and an impetus from those with large enough deposits to secure mortgage finance before interest rates are hiked. This will underpin activity in the short-term while the market acclimatises to post-MMR processes.”

Stephen Smith, director of Legal & General Mortgage Club and housing, said: “Over the next few months, whilst we don’t expect lending to drop, it is likely that we will see a shift in who banks are lending to.

“With interest rate rises firmly on the horizon, now is a good time for homeowners to assess their finances and ensure they have the best deal available to him. With that in mind, over the coming months we would expect lending to remortgagors to rise compared to first time buyer loans.”