Mortgage lending increased by record amount

Mortgage lending increased by a record amount in March, adding more fuel to the theory that the boom in house buying shows no sign of slowing down.

The British Bankers' Association said mortgage lending by its members increased by a record ?4.05bn last month to reach ?389.4bn.

There was also an increase in loan approvals (loans approved but not yet made), with 216,900 loans collectively worth ?13.68bn approved - 12% higher in number and 23% greater in value than figures for March 2001.

Compared to March the previous year there were 11% more loans approved for house purchase, but 2% fewer for remortgaging.

Around 66,800 mortgages worth ?1.3bn were also approved for equity withdrawal, the process where homeowners can unlock some of the money tied up in their home. This was the highest monthly figure for equity withdrawal yet and 29% higher than the previous year. BBA chief executive Ian Mullen said: "It is already clear that the mortgage market is operating at a higher level this year than at the same time last year. "This picture should continue in the coming months, according to figures for loan approvals from the major banks.

"The investment potential of property may continue to reinforce the performance of the residential market, together with the ability to use the equity stored in property values to fund spending on big-ticket items."

But while mortgage lending increased, growth in credit card debt and personal loans was weaker. During March, Britons put ?5.64bn on their plastic, 2% below the recent monthly trend and, once strong repayments were taken into account, credit card borrowing rose by just ?199m compared to a recent average of ?240m.