Mortgage lending reached record levels last month showing the property boom is continuing unabated.

There were increases in both borrowing and loan approvals according to figures by the British Bankers' Association.

The figures add to the speculation that the Bank of England is likely to raise interest rates later in the year.

The association revealed lending leaped by a record £4.05 billion in March to reach £389.4 billion. There were more than 216,900 mortgages approved last month - worth £13.68 billion - 12 per cent higher than the previous year.

BBA chief executive Ian Mullen said: "This picture should continue in the coming months, according to figures for loan approvals from the major banks. The investment potential of property may continue to reinforce the performance of the residential market, together with the ability to use the equity stored in property values to fund spending on big-ticket items," he said.