UK mortgage lending in January picked up to levels not seen since April 2004, providing further evidence that the housing market is continuing to strengthen, official figures from the Bank of England showed. The central bank reported that net mortgage lending during January rose by 9.2 bln stg after rising by 8.8 bln stg in December. The rise is well above analysts' forecasts for a slight moderation in lending growth to around 8.5 bln stg and is the biggest rise since April 2004 when house prices were rising rapidly. The figure remains well above the six-month average of 8.0 bln stg. Meanwhile, the number of approvals for house purchases -- which are often seen as a good indicator of future demand in the property sector -- also remained strong. Approvals totaled 122,000, unchanged from December's figure which was the highest number since March 2004 and again above analysts' expectations for a reading of 117,000. The total value of mortgage approvals -- which also includes remortgaging -- rose by 28.9 bln stg, down from December's 29.0 bln stg rise but above the 27.2 bln stg average over the past six months The figures suggest that the housing market has turned the corner after a relatively subdued performance in 2005 and are likely to diminish expectations of another interest rate cut from the Bank of England this month. Further evidence will be needed that this strength is being maintained, however, after a survey released by Nationwide yesterday showed house prices unexpectedly fell 0.2 pct in February from a month earlier -- the first monthly decline in eight months. "There is undeniably a risk that house prices could move significantly higher over the coming months. Indeed, this risk is currently flashing brightly on the Bank of England's radar," said Howard Archer at Global Insight. However, he believes that house price gains will be modest through the year as buyers are constrained by concerns over affordability, elevated debt levels and a further weakening in the labour market Rate-setters at the Bank of England may nevertheless be relieved to see a pick-up in consumer credit driven by credit card lending and suggesting that UK consumer spending may finally be starting to pick up after slowing towards the end of last year. Today's release showed that net consumer credit rose by 1.3 bln stg after a rise of 0.9 bln in December -- revised up slightly from the previous estimate of 0.8 bln --, well above expectations of a 1.0 bln increase