Mortgage lending soared by 21% in March

Mortgage lending soared by 21% during March as both buyers and people remortgaging returned to the market.

A total of £11.3 billion was advanced during the month, the highest level since November, but still slightly down on the £11.5 billion that was lent in March last year, the Council of Mortgage Lenders said today.

The group attributed the increase to a rise in activity in the housing market, as well as strong demand from existing homeowners who were remortgaging to a new deal.

It said loan approvals for remortgaging were at their highest level for more than two years during February, and this fed into higher lending levels in March.

Demand is expected to remain strong as the prospect of interest rate hikes prompts people to remortgage off their lenders' standard variable rates.

Council of Mortgage Lenders (CML) chief economist Bob Pannell said: "The housing market has emerged hesitantly from hibernation. Lenders expect mortgage credit availability to improve this quarter, and this should help to underpin house purchase activity, albeit at pretty low levels.

"Remortgage demand, meanwhile, continues to firm, presumably linked to expectations of higher base rates. Stronger remortgage activity looks set to continue propping up overall lending."

But despite the rebound in lending during March, the slow start to the year meant that mortgage advances for the first quarter totalled just £30.1 billion, 11% less than during the final quarter of 2010.

The group said household finances remained under a lot of pressure, and this had caused many people to put off moving home.

The figures are in line with data released by the National Association of Estate Agents this morning, which showed a sharp jump in the number of potential buyers registering with estate agents during March, pointing to an increase in activity in the market.

But agents warned that many homeowners were still being over-optimistic and pricing their properties too high, while lending conditions remain tight.