Net mortgage borrowing reached a record £11.8 billion in March, according to the Bank of England.
It was the strongest figure since records started in April 1993, the bank’s money and credit report said.
Housing market experts said those home owners who are not moving are taking advantage of low mortgage rates to improve their properties.
In an indication of future lending, 82,700 mortgage approvals were made to home buyers in March, which was lower than the recent peak of 103,100 in November 2020.
Looking at non-mortgage lending, households continued to pay back more than they borrowed in March.
A net consumer credit repayment of £535 million was recorded, including people’s borrowing using credit cards, personal loans and overdrafts.
A stamp duty holiday was due to end in March but was extended. In April, a string of lenders launched 5% deposit mortgages as part of a Government-backed scheme.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The strength of the runaway housing market is being reflected in the mortgage data, with strong levels of borrowing in March.
“With home owners 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.”
Simon Gammon, managing partner at Knight Frank Finance, said: “The property market is red hot as home seekers that put off moves during the worst of the crisis are now out buying.
“Brightening economic sentiment alongside big changes to styles of working and living and limited stock availability is a potent mix likely to drive activity and house prices well into the summer months.
“We do expect activity to begin slowing at that point. We’re already seeing more houses put on the market that will redress the supply imbalance and activity will naturally slow as the bulk of buyers that put off moves find new places to settle.
“The lenders know this and are taking the opportunity to build market share by offering competitive rates and increasing product choice.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “Buyers are determined to move even though many know the logjam in the system will mean they won’t be able to take advantage of the stamp duty concession before the tapering begins at the end of June.
“Looking forward, we don’t expect much to change although prices will probably soften rather than correct as more people’s requirements are satisfied and balance between supply and demand returns.”