Consumers target property market

House prices have continued to rise

Britons are continuing to fuel the housing market but are cutting back on High Street spending, influential surveys have indicated.

Mortgage lending surged by almost one quarter to £11.3bn last month, compared with February, figures from the Council of Mortgage Lenders reveal.

The value of loans given for house purchases, rather than remortgages of current homes, grew at 35%.

The data, which follows reports from individual lenders of firm house prices, was supported by a report from the British Bankers' Association on Monday showing "buoyant" mortgage lending.

While the BBA survey revealed only an 8% rise in property loans last month, the figure was 16% above the recent average.

Credit card spending

But the BBA report also revealed declining demand for personal loans and credit card borrowing to fund high street spending.

Tim Sweeney: individuals' finances "in good shape"

Personal lending was at its lowest levels since September, the BBA said, with credit card lending remaining "much weaker" than a year ago.

The decline follows official data on Friday which showed weakening High Street sales, fuelling fears over the growth of the UK economy.

But, with Britons putting more cash on deposit, the slowdown in customer loans was welcomed by BBA director general Tim Sweeney as a sign of prudent financial housekeeping.

"It appears that individuals' finances are in good shape," he said.

Seasonal increase

Michael Coogan, director general of the Council of Mortgage Lenders, said the March rise in property lending reflected a traditionally strong period for home buying.

"A seasonal increase in housing market activity is to be expected during spring," he said.

He predicted, that with interest rates on a declining trend and High Street lenders engaged in a rates war, homebuyers will throughout the spring be able to snap up favourable mortgage deals.

"Mortgage rates are now at their lowest level since the end of 1999 and, with April's interest rate cut still to feed through, the competitive mortgage market is set to yield further benefits," Mr Coogan said.