"We expect activity to continue to be brisk over coming months, particularly as mortgage rates are likely to remain low and with increased availability of high loan-to-value deals."
This surpasses the previous peak of £10.4 billion in October 2006. The strength in net lending reflected gross lending also reaching a new series high in March of £35.6 billion.
The strength in mortgage borrowing follows a large number of approvals for house purchase. These approvals have fallen from a recent peak of 103,100 in November to 82,700 in March, but remain above the 73,000 approvals seen in February 2020. Approvals for remortgaging with a different lender remained broadly unchanged at 34,800.
The data also shows that the average interest rate on newly drawn mortgages rose 4 basis points to 1.95% in March. That is above the rate in January 2020 (1.85%), and compares to a series low of 1.72% in August 2020.
Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "The strength of the runaway housing market is being reflected in the mortgage data, with strong levels of borrowing in March. With homeowners borrowing an additional £11.8 billion, taking net borrowing to its strongest level since the series began in 1993, those who are not moving are taking the opportunity to improve, with cheap mortgage rates helping them make this decision.
"With the stamp duty holiday originally expected to end in March, this focused borrowers’ minds and helps explain the uplift in lending. Now that this has been extended we expect activity to continue to be brisk over coming months, particularly as mortgage rates are likely to remain low and with increased availability of high loan-to-value deals.
"The trend to save continues with households depositing an additional £16.2 billion in March, despite savings rates at historically low levels. This is an encouraging trend although it will be interesting to see whether it continues to the same extent as lockdown eases further."
John Phillips, national operations director at Just Mortgages and Spicerhaart, added: “This year has been unprecedented in terms of the volume of mortgages, and March was possibly the peak in an impressive climb. Partially driven by a desire to beat the initial stamp duty deadline, we’ve had a continuous stream of clients looking for mortgages in the first quarter of 2021.
“With the record interest in moving, brokers and lenders deserve a great deal of credit for the huge number of mortgages that have been approved recently. Our brokers have delivered exceptional service while working from home, and as a result we are giving experienced brokers the option to work from home for the future.
“With other companies in a variety of industries making similar decisions, these changing working practices should fuel the desire to move, so the market should remain busy for the next few months at least.”
