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Last Updated: Thursday, 29 March 2007, 10:26 GMT 11:26 UK
Mortgage lending picks up again
Houses for sale
Recent surveys have suggested the market is beginning to cool
Mortgage lending figures rose strongly last month, Bank of England figures have shown, pointing to continued strength in the housing market.

The value of new home loans totalled 10.2bn in February, up from 9.5bn the month before and ahead of forecasts.

The number of mortgage approvals remained steady at 119,000 last month, again above market expectations.

Analysts said housing market conditions were robust but were still expected to slow later this year.

Rate factor

Many believe the likelihood of a further quarter point rise in interest rates, on top of January's increase, will take the heat out of the market in the second half of 2007.

On Wednesday, the Nationwide building society said that its latest house price survey had found inflation slowing to 9.3% in March from 10.2% last month.

The Bank of England's judgement on the housing market is likely to remain that the slowdown is tentative
Philip Shaw, Investec

Last week, the Royal Institution of Chartered Surveyors said that enquiries from potential homebuyers had fallen for the first time in two years, suggesting that the recent rise in rates has begun to have an impact on the market.

However, the latest survey from the Land Registry found that house price inflation in England and Wales had picked up.

It said that in February prices rose by 1%, pushing the annual rate of inflation up to 8.5% - the highest rate for almost two years.

According to its calculations the average selling price in England and Wales is now 177,099.

Prices are rising fastest in London, it reported, where they are now 11.3% higher than a year ago.

'Life in the market'

Analysts said the latest Bank of England figures on mortgage lending and approvals were stronger than expected.

Although the level of mortgage approvals was the same as last month, it was higher than December's figure and above market expectations of 117,000 new loans.

Levels of mortgage lending were above the 9.4bn figure forecast although below December 10.6bn figure.

"While many other surveys suggest the housing market is losing steam, this would indicate there is still some life left in it," said Philip Shaw, from Investec.

"The Bank of England's judgement on the housing market is likely to remain that the slowdown is tentative and interest rates will still need to rise."

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