Growth in lending was aided by a number of first-time buyers encouraged by government initiatives such as Help to Buy, the CML said.

Overall, 2014’s figure outstripped gross mortgage lending in 2013 by 17% which stood at £176bn.

Estimated gross mortgage lending reached £16.5bn in December 2014, remaining unchanged month-on-month compared to November, but down 1% compared to December 2013.

While the CML’s estimate of £51.6bn for Q4 2014 is down 8% on the previous quarter, it increased by 1% on the fourth quarter of 2013.

The Bank of England’s Trends in Lending report displayed similar movement with average monthly net lending flow at £1.8bn in the three months to November, slightly lower than the previous three months. The annual rate of growth in the stock of secured lending to individuals rose slightly to 1.9% in November.

CML chief economist Bob Pannell said: “Housing market activity has been cooling and house price growth slowing in recent months, but 2014 was still the strongest year for mortgage lending since 2008.

“First-time buyers were a key driver, helped by government initiatives such as Help to Buy. As a result, the number of first-time buyers topped the 300,000 mark. While a far cry from the half million that we might regard as ‘normal’, this was the highest number of first-time buyers since 2007.

“Although lending remained muted in December, the previous monthly pace of decline in approvals appeared to moderate. So, alongside the big picture of a softer market, we are beginning to detect signs that underlying market conditions may be stabilising.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the firm predicted that lending would be in the region of £215bn in 2015, despite expectations that the housing market would be more subdued over the coming months.

“While first-time buyers have been a key driver of the market last year, we expect the remortgaging market to be strong over the next 12 months with borrowers not so much fearing a rate rise but enticed by some of the astonishingly cheap deals now available.”

He added: “Lenders have already reacted to falling swap rates with record low mortgage rates. With ten-year fixes now available from just 2.94%, an exceptionally cheap deal for such certainty, more and more borrowers will be tempted to commit for the longer term. The next step is for lenders to start easing criteria rather than cutting rates, a move we hope to see this year.”