Gross mortgage lending reached £27.7bn in February, the highest figure in five years as buyers rushed to take advantage of the stamp duty holiday, according to Bank of England data.

The total was 19 per cent higher than a year earlier, when lending was £23.3bn, and 13 per cent more than January’s figure of £24.5bn

Net mortgage borrowing reached £6.2bn in February, which was also the strongest figure since March 2016.

Mortgage approvals for house purchase were 87,700 in February, which was a decline from the peak of 103,700 in November 2020, but 19 per cent higher than the 73,500 recorded a year ago.

Approvals for remortgage, which do not include product transfers, rose slightly from 32,600 in January to 34,300 in February.

The average interest rate paid on newly drawn mortgages increased by 6 basis points to 1.91 per cent in February, while the rate on the outstanding stock of mortgages remained at a series low of 2.09 per cent.

Coreco managing director Andrew Montlake says: “It’s no surprise net mortgage borrowing hit a five-year high in February, as a large number of stamp duty holiday-fuelled transactions that started last year completed in advance of the deadline.

“Though up on the same month last year, mortgage approvals were understandably lower than the November high as a lot of people, by February, felt they had missed the stamp duty deadline. 

“There is still a decent amount of activity in the market at present, and lenders, though still more cautious than they were pre-Covid, have released a lot more products in recent weeks.”

Magni Finance director Ashley Thomas says: “There are more higher loan-to-value products in the market today compared to a month or two back, a sign that lenders are making tentative steps to their pre-Covid offerings. 

“There is a lot of confidence in the housing market right now. 

Due to the extension of the stamp duty relief scheme and the success of the vaccination programme, more and more people see now as a great time to move.

“We have seen an influx of clients looking to buy second properties outside London. 

“Most have been looking at areas such as the Cotswolds and New Forest, where they can have a holiday retreat and even use it as their primary residence going forward if they are predominantly working from home.

“We have even seen some clients looking further abroad, such as the South of France. 

“For wealthy clients, they see a lot of opportunity as the cost of borrowing is extremely low if you have a sizeable deposit.”

Langley House Mortgages director Toby Fields adds: “Over the past month or two, lenders have become much more comfortable at higher loan-to-values. Underlining the growing confidence among lenders, this has happened before April when the 95 per cent loan-to-value government-backed scheme begins.

“We have seen four lenders return to 95 per cent lending without using the scheme, although none are lending beyond £500,000. 

“That said, the self-employed and furloughed applicants are still the hardest hit, with lenders applying the biggest restrictions and scrutiny to them.

“More 90 per cent loan-to-value products have also been introduced by lenders in recent weeks, many with more competitive rates than before.

“The tougher criteria on many 90 per cent loan-to-value loans, such as a maximum term of 25 years, not lending to self-employed people or on flats and new builds, have also been lifted.

“Today, there are 90 per cent LTV rates available such as a two-year fixed rate at 3.05 per cent with a £399 fee. 

“At the start of the latest national lockdown, rates were much higher.”