Mortgage lending by banks grew at a slower rate last month than in February, figures showed yesterday.

Seasonally-adjusted net mortgage lending - which excludes repayments - rose by £4.6 billion in March against £4.8 billion beforehand, according to data from the British Bankers' Association.

That was more than £1 billion below the £5.7 billion recorded in March last year, although slightly higher than the average of £4.5 billion in the previous six months.

Net lending in the first quarter of this year was 19 per cent below the first quarter a year earlier.

Loans approved for house purchase in March reached their highest monthly total since the middle of last year, 19 per cent greater than in February, but 30 per cent weaker than March 2004.

Growth in overall net consumer credit at a seasonally adjusted £500 million weakened again in March.

The BBA's statistics director David Dooks said March mortgage figures showed signs of a spring stimulus, but not to the same extent as last year.

Activity levels on any measure continued to run below those 12 months earlier, but loans approved for house purchase saw some recovery.

"It is too soon to say whether the slowing housing market seen over the previous six months or so is now picking up," Mr Dooks said.

However HBOS, Britain's fourth-biggest bank, said trading was in line with expectations, helped by a strongerthanexpected housing market.

"The first three months of 2005 have been characterised by asset growth in line with expectations, stable margins, good levels of non-interest income and tight cost control," chief executive James Crosby told the annual shareholders' meeting.

Afterwards he said the housing market was performing more strongly than HBOS, Britain's biggest mortgage lender, had expected.

The bank had predicted prices would fall by two per cent this year after nine straight years of gains.

" We were the only prominent commentators to forecast that prices would fall in 2005. On the evidence so far, that might look slightly bearish," Mr Crosby said.

Mr Crosby said the prospects for takeovers involving UK banks was muted this year and beyond.