The number of UK mortgage approvals increased during March to their highest level in seven months, according to Bank of England (BoE) lending figures.
New loans rose to 91,000, from 86,000 in February, prompting some analysts to suggest that the UK housing market is undergoing a "soft landing".
Mortgage lending rose by £7bn, down slightly on the previous month.
At the same time, the BoE revealed that consumer credit rose by £1.85bn, more than £100m above expectations.
Soft landing?
City analysts greeted the BoE's figures by suggesting that the UK housing market could be undergoing a "soft landing", following five interest rate rises since November 2003.
"The Bank of England should take heart from the mounting evidence that the housing market has achieved a soft landing," said Gavin Redknap, economist at Standard Chartered bank.
Geoffrey Dicks, UK economist at Royal Bank of Scotland financial markets, said the rise in approvals and consumer credit was "surprising".
"In percentage terms mortgage borrowing has risen 0.8% in each of the past five months which suggests stability more than anything," Mr Dicks said.
"Overall a bit more life in the housing market and in credit demand than might have been expected."
The rise in mortgage approvals follows figures from the Nationwide Building Society showing house prices were picking up following recent falls.
On Thursday, Nationwide said that house prices rose by 0.9% in April.
Nevertheless, the annual rate of property price inflation fell to 7% from 7.9%, and the Nationwide said the overall trend remained "broadly flat".
However, official figures suggest that some UK homeowners are struggling to cope with rising rates. According to the Department for Constitutional Affairs, the number of property repossession orders rose by 25% in the first three months of 2005, against the same period in 2004.
Rate decision
Overall, the BoE figures revealed that the number of loans approved in March was far below the high point reached in late 2003. Back then about 130,000 mortgages a month were being approved.
The figures also revealed an unexpected surge in consumer credit during March.
The bank said consumer credit rose £1.85bn in the month, up from £1.64bn in February.
Many economists had been expecting consumer credit to rise by £1.7bn in March.
The rising mortgage approvals and consumer credit may strengthen the case of those calling for the BoE's Monetary Policy Committee (MPC) to raise UK interest rates when they meet in May.
he MPC has left rate on hold for the past eight months but many economists have been predicting a rise soon.
Source:: news.bbc.co.uk
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