Lenders say rate cuts are enticing home buyers

Demand for home loans has been boosted by successive cuts in interest rates since the autumn, according to figures released yesterday.

The start of the house-buying season in April witnessed the sixth consecutive monthly ?1bn-plus increase in mortgage lending, the British Bankers Association said.

Building society lenders also reported strong demand for loans, with approvals for house purchase standing at almost ?2.5bn.

The Building Societies Association's director-general Adrian Coles said: 'For the second month running the building society lending figures reveal a healthy housing market, reinforcing the view that the recent upturn in the market is likely to be a sustained rather than a seasonal trend.'

The Bank of England's decision to hold interest rates will 'not have dented confidence of home buyers'.

Mr Coles said the latest figures showed that 'borrowers are enjoying the relatively upbeat economic outlook as well as the lowest mortgage rates for over three decades'.

Although figures on Thursday showed consumers reluctant to spend in shops and stores, yesterday's data suggest consumers are becoming more confident.

Office for National Statistics figures showed Britons are taking advantage of the strong pound to travel abroad more frequently.

In the first three months of 1999, visits overseas by UK residents were up by 4% on the previous quarter to 13.6m, while visits by overseas residents to the UK fell by 1% to 6.6m. Britain's deficit on travel and tourism widened to almost ?2bn in the first quarter of this year, the ONS said.

While the consumer side of the economy has begun to look more buoyant, separate government figures yesterday showed manufacturing and investment still in the doldrums.

Car production in April was down 10.5% on the same month a year earlier, with a 10.2% rise in export output failing to offset a drop of 36% in production for the domestic market.

Commercial vehicle production, normally a good guide to the overall state of the economy, was 11.2% lower in the latest six months than in the same period a year earlier, the ONS said.

Weaker output by Britain's factories has had a knock-on effect on manufacturing investment, which dropped by 2.5% in the first quarter and was almost 9% down on the first quarter of 1998.

Investment in the services sector, which has been shielded from the impact of the strong pound, was up by 1.1% on the quarter and by 18.4% on the year.