Record new mortgage deals point to fresh house price surge

Almost a quarter of a million homebuyers rushed to reserve a mortgage loan last month according to figures yesterday that point to a surge in prices over the traditional summer house-hunting season.

Almost a quarter of a million homebuyers rushed to reserve a mortgage loan last month according to figures yesterday that point to a surge in prices over the traditional summer house-hunting season.

A record 232,800 loans were approved in April for a total value of £14.8bn, the British Bankers' Association said. This was a third more than were taken out a year ago while the value of the loans surged by 41 per cent.

The figures will support hopes that the strength of consumer confidence will continue to drive the domestic economy.

The figures came as doubts grew over last week's surprise downward revision to the latest estimate of economic growth to zero.

Tomorrow Nationwide building society is expected to say that house prices enjoyed another jump in May.

Simon Pitkeathley, an executive director at BBA, said: "The third record increase in net mortgage lending in the last four months says everything about the current strength of the mortgage market."

The jump in approvals was driven by strong levels of demand for house purchase loans, which at £8.62bn were 41 per cent higher in value than last April.

Fears that a surge in borrowing would lead to a rise in interest rates were calmed by comments from a senior Bank of England official yesterday.

Ian Plenderleith, who steps down from the Monetary Policy Committee this month, said he believed rates could stay on hold "for the time being".

"Given ... that the central expectation is of inflation staying at or slightly below target this year and only beginning to get up to target and above it next year, it is perfectly sensible to say we can stay where we are for the time being," he said.

He said some MPC members thought rates might need to rise in the coming months, but said "that does not mean there is any kind of firm agreement that that is going to happen".

But he also used a valedictory interview, with Reuters news agency, to cast doubt on last week's official figures that cut the estimate of economic growth in the first three months of the year to zero from 0.1 per cent.

"I thought there would be evidence of a pick-up in actual activity so I was surprised because it showed a pretty soft picture," he said. "The puzzle is it comes alongside really quite buoyant forward-looking indications."

The revision threatens to undermine bullish forecast for growth of as much as 2.5 per cent this year from the Chancellor, Gordon Brown.

But a Treasury spokesman also appeared to cast doubt on the estimates from the Office for National Statistics. "The figures can be revised considerably later in the year," he said.