The latest set of mortgage lending figures confirm that the recent recovery in the housing market looks set to continue, albeit at a slightly slower pace.

The British Bankers’ Association reported today that net mortgage lending grew by £4.6 billion in January, down from the £5.3 billion increase in December, but only slightly below the recent average.

Meanwhile, figures from the Building Societies' Association showed the value of mortgage approvals - loans agreed but not yet made - rose to £4.322 billion in January, the highest since November 2003 - the month that the Bank of England began its cycle of raising interest rates from the historic low of 3.5 per cent.

Separately, the Council of Mortgage Lenders said gross mortgage lending totalled £23 billion in January - the highest lending figure for that month on record and nearly one-third higher than the £17.4 billion lent in January 2005.

The figures came as Rightmove.co.uk, the estate agency website, said asking prices rose by 2.7 per cent in the month to mid-February. Analysts said higher mortgage lending was feeding through to push house prices higher.

"Increased housing market activity has clearly led to some recent firming in house prices, and there is undeniably a risk that prices could move sharply higher over the coming months, "Howard Archer, chief UK economist at Global Insight, said.

"However, we continue to believe that if house prices start to accelerate significantly on an extended basis, buyer interest will increasingly be stifled, thereby causing prices to moderate anew.

"We expect the upside for house prices to be contained by stretched affordability ratios on many measures, elevated debt levels and a further weakening in the labour market," he added.

John Butler, chief UK economist at HSBC, said the figures would not have much influence on the financial markets but at the margin, they should be treated as "hawkish" for interest rates.

Mr Archer said: "Further evidence of robust housing market activity may well add to Bank of England concern that a further trimming of interest rates could excessively stimulate the housing market and risk send housing prices markedly higher."

The BBA figures also showed that unsecured lending – principally loans and overdrafts - increased by £0.7 billion in January, slightly higher than the six-month average of £0.5 billion.

Yet consumers still seem wary to splash out using their plastic with credit card borrowing increasing by just £100 million - in line with the average for the last six months.

Average house prices hit £200,000