Mortgages approved for people buying a house reached the highest level for nearly two years during March.
A total of 85,698 home loans were approved during the month, the highest since June 2004 and nearly double December's total, said the British Bankers' Association.
At the same time, the average value of a mortgage for someone buying a property rose to £134,300 - nearly £8,000 higher than the level at the beginning of the year.
Overall, a total of 217,072 mortgages were approved for all purposes during the month, worth £21.7 billion, 30 per cent higher by number than during February.
The BBA said some of the rise could be accounted for by the high number of working days during March inflating the total.
BBA director of statistics David Dooks said: "On the face of it, mortgage lending was strong in March.
"Whilst partly reflecting the high number of working days in the month, the approvals numbers show that mortgage activity is running at a higher level than at this time last year, although the market is still somewhat short of the heady times of 2004."
The figures suggest the property market will remain strong in the near future.
Economists had expressed concerns that the mini-revival could be coming to an end following a fall in mortgage approvals during February.
Gavin Redknap, an economist at Standard Chartered, said: "The fact that mortgage approvals saw their strongest result since mid-2004 underlines the health of the housing market at the moment.
"We're not going to get back to double-digit house price growth any time soon, but the outlook for the housing market looks at its brightest for some time."
The market for remortgaging also remained strong duri ng March with 76,405 remortgage loans approved, the highest number since March 2004.
The number of people taking out new loans to release equity from their property was also higher than it has been in recent months.
Overall a total of £17.67 billion was advanced through mortgages that had been approved in previous months during March - the highest figure on record for the month.
But as previously reported, unsecured lending was weak during March, with consumers reducing their credit card borrowing by £239 million, compared with a rise averaging £121 million during the past few months.
Lending through personal loans enjoyed its strongest month since September, but this was offset by a fall in overdraft borrowing, leading to total lending through these two products seeing a rare fall, with consumers paying back £133 million.
This compared with an increase in overdraft and loan debt of £383 million during recent months.
The figures followed a survey from the Centre for Economics and Business Research which indicated property prices could rise by six per cent this year.
The consultancy said it had revised up its forecast for UK house price growth during 2006 from 4.4 per cent in January following stronger than expected confidence in the market and sustained growth in the financial markets.
But it added that it still expected house price inflation to taper off towards the end of the year as higher levels of unemployment and bigger household bills started to bite.
Gains in London and the wider South-east are set to lead the way.
The group expects weaker activity to persist into 2007 and 2008 as the market continues to adjust following the 2004 boom, with growth fall-ing to three per cent in 2007 and to just two per cent in 2008.
But it is predicting house price inflation will pick up in 2009 and 2010, with the aver-age cost of a home breaking the £200,000 threshold by 2010.
