Banks and building societies insisted efforts to unblock the mortgage market were on track despite a pause in lending momentum during January.
The Council of Mortgage Lenders (CML) reported that lending fell back by 9pc month-on-month in January, with an estimated £10.4bn of loans advanced last month, which was also down 3pc on the same period a year ago.
Despite the slowdown, the CML said it still expects activity to lift in the coming months amid better mortgage availability and a raft of cheap deals on offer.
Separate research released on Wednesday by financial information website Moneyfacts found that a recent mortgage price war among lenders has pushed average fixed-rate two, three and five-year mortgage rates to their lowest in 24 years.
A typical two-year fixed rate deal across all loans-to-value is 4.11pc, while a five-year fix has reached 4.14pc. In 1989, a two-year fix would have had an average rate of 12.83pc while five years was 12.85pc.
Record (LSE: REC.L - news) low interest rates have made borrowing cheaper and lenders have scrambled to offer some of their "best ever" rates since the Government introduced a Funding for Lending scheme last August, which gives lenders access to cheap finance.
The CML reported earlier this month that the number of first-time buyers in the UK rose to its highest annual level in five years in 2012.
It has also pointed to "encouraging" signs that people with small deposits are getting access to mortgage deals and previously said that around one in 40 first-time buyers is taking out a 95pc mortgage, compared with less than one in 100 a year ago.
Meanwhile, more than 3,000 homes have been reserved under the Government's NewBuy scheme, which allows home movers and first-time buyers to purchase a property with a 5pc deposit.
However, while the mortgage market has improved, households are still facing strong pressures on their finances from high living costs and stagnant wages, which are holding back their desire and ability to take on more debt.
CML market and data analyst Caroline Purdey said: "Housing sentiment remains positive, despite ongoing economic pressures.
"A worsening in the outlook for inflation presents a greater headwind, but we still expect the Funding for Lending scheme to lift activity over coming months.
"House purchase activity was robust into the start of 2013, on the back of better mortgage availability and pricing, and we share the Bank of England's confidence that this will continue over the coming months."
Analysts said that much of January's dip was likely to be down to the recent spate of snowy weather.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "For a market that rests on confidence, optimism in the housing market continues, despite the blip in January figures.
"The mortgage market is still constrained when you compare it with what it was at the height of the housing boom but it is showing some signs of improvement."