Mortgage lending to first-time buyers soared in March, as house-buyers rushed to buy their first home before the end of the stamp duty holiday.

Properties below the value of £250,000, purchased before 24 March, were exempt from the 1 per cent tax.

Twenty-four thousand mortgages were approved for first-time buyers in March, a 74 per cent increase from the previous month and 57 per cent higher than in March 2011.

Ninety-eight per cent of first-time buyers took out repayment mortgages, the biggest proportion since CML records began.

The total number of new mortgages granted in March increased to 51,200, 44 per cent higher than in February, and 31 per cent higher than in March 2011.

The Council of Mortgage Lenders (CML) said that the increase in activity was likely to be followed by a fall back to previous levels.

CML director general Paul Smee said: “We expected this significant increase in borrowing for March because of the stamp duty holiday.

“However, if lending follows the same pattern as after previous stamp duty concessions, we will likely see a drop in activity in the next few months.”

In related news, housing minister Grant Shapps has announced the launch of a £30m fund to encourage people to build their own homes.

The fund will provide short-term finance for self-build projects, which are soaring in popularity.

The number of self-build mortgages is expected to increase by 141 per cent.

In order to promote the self-build option in the UK, Mr Shapps has appointed Grand Designs presenter Kevin McCloud.

Just 10 per cent of homes built in the UK each year are the result of self-build projects and the government wants the self-build industry to double in size.

Mr Shapps said: “The self-build industry is riding the crest of a wave, with more people than ever wanting control over the design and build of their home.

“But despite this self-build surge, we continue to lag behind the rest of the world.

“I am determined to change this so anyone who wants to embark on a self-build project has the opportunity to do so.”

Chancellor of the Exchequer George Osborne has secured a key agreement allowing the UK government to regulate its banks more strictly than other EU member states.

The agreement was secured in Brussels between European Union finance ministers.

It allows the UK to ring-fence retail banking operations from riskier investment banking operations in order to protect them in the event of another financial crisis.

This was a key element in recommendations made by the Independent Commission on Banking in 2011.

At the meeting, Mr Osborne softened his position on a proposed EU law which would introduce more stringent capital standards for banks.

The law has been a sticking point between Britain and the rest of the EU.

Mr Osborne dropped his objections in the face of ongoing difficulties in the eurozone, and expressed his support for the proposal.

This will allow regulations to be introduced next year requiring banks in EU states to hold more capital to cover potential losses on loans.

“We are reaching a point where we have got to make a decision to see the euro zone stand behind their currency,” Mr Osborne said.

Mr Osborne secured the right for Britain to increase the minimum capital buffer held by banks from 7 per cent to 10 per cent; however the UK will require permission from Brussels to raise it above this level.

Meanwhile, financial experts have warned MPs that selling the government’s stake in RBS and Lloyds could take years.

The government acquired shares in the two banks as part of its rescue package during the banking crisis.

Experts, including fund managers and investment bankers, told a committee of MPs that public anger towards banks was keeping the share price low and that breaking up RBS could reduce the amount taxpayers receive for their stake in the bank.

Retailer Sainsbury’s is offering a credit card with an interest rate of just 6.9 per cent on new purchases, but the card is only available to nectar card holders with good credit ratings.

According to new research by the retailer, the number of cards offering a lower-rate APR over a long-term, with no introductory offer, has fallen by 35 per cent since 2007.

As well as offering the lowest APR currently available, the new Sainsbury’s card comes with no balance transfer fee.

Sainsbury’s research found that despite the low base rate, there are just four cards on the market offering rates below 10 per cent APR on purchases.

Five years ago 14 cards offered an APR below 10 per cent.

Sainsbury’s new card is likely to appeal to consumers who don’t want the hassle of having to shop around for another card when an attractive introductory rate expires.

Cards with a low introductory offer often revert to a high APR at the end of the introductory period, which can be a little as 12 months.

Stuart McKeggie, Head of Sainsburys Credit Cards, said: “Customers choosing a credit card must remember to be realistic about what will happen to their rate at the end of the introductory offer.

“There are so many introductory offers available today and many people may think this is the best option for them but that might not necessarily be the case.

“It’s important to think about your card usage and consider the benefits of introductory offers against the benefits of cards with good standard long-term rates; in many cases the latter could make more financial sense and be more convenient.”

Separate research by moneysupermarket.com suggests that consumers are increasingly relying on overdrafts, credit cards and savings to tide them over until payday.

However the study suggests that they could be eroding their retirement income by using these forms of credit because of the interest they accrue.

Kevin Mountford, Head of Banking at moneysupermarket.com, said: “For those relying on credit cards or their overdraft as a fall back until pay day, it really does pay to research your options and think about the additional interest you could end up forking out beforehand.”

Household borrowing soared in the decade leading up to the start of the financial crisis in 2008 according to a report by the National Institute for Economic and Social Research (NIESR) and the Resolution Foundation.

Household spending, GDP and property prices all increased steadily between 1997 and 2007 but the report suggests that this growth was heavily based on borrowing.

The study shows that during the decade to 2007 the poorest 10 per cent of UK households increased their spending by 43 per cent while disposable income grew by just 17 per cent.

Middle income households were also borrowing more, with a 33 per cent rise in income more than offset by a 46 per cent increase in spending.

The wealthiest households saw disposal income rise by 13 per cent during the decade, while spending increased by 28 per cent.

The figures expose the proportionally greater reliance of the poorest families on debt prior to the credit crunch, compared with higher income households.

Gavin Kelly, chief executive of the Resolution Foundation, said: “Looking to the future, we need growth that is sustained by gains spread across the whole income distribution – not ever more debt for those on the lowest incomes.”

The figures indicate that the buoyant economy prior to the credit crunch was fuelled by debt and was therefore unsustainable.

Jonathan Portes, director of NIESR, said: “This research suggests that there may well have been a connection between the rise in income inequality in the years preceding the crisis and the rise in household borrowing, particularly for those on lower incomes.

Post-credit crunch the problem of household debt still persists, with the latest figures from money charity Credit Action showing that the problem has worsened this year.

In March 2012 the average household debt, excluding mortgages, increased by £19 to £7,903 on a month on month basis, while average debt including mortgages rose by £52 to £55,436.

In 2010 and 2011 household debt fell each month, but with the UK back in recession, the latest figures show that this trend is reversing.

Housing charity Empty Homes has highlighted a clause in many insurance policies which could leave homes uninsured if they are left unoccupied.

It is estimated that there are 930,000 empty properties in the UK and while their owners may think they are covered by insurance, this clause could mean that many are actually uninsured

The sluggish housing market means that properties are selling slowly and may be left unoccupied for a prolonged period of time, while second homes may also be unoccupied for much of the year.

The insurance clause could mean that a policy becomes invalid if a property stands empty for more than 30 days.

The best option for owners of unoccupied properties could be to take out a specialist policy to cover the building and its contents.

If an existing policy is extended to cover an empty home it is likely that it will only be extended for up to three months and it may not cover risks such as water or malicious damage.

Specialist policies will provide cover for water, fire and smoke damage and will also provide liability cover.

Taking out a specialist policy may even work out cheaper than extending existing building and contents insurance.

However, homes will generally need to be in a good state of repair and securely locked in order to be eligible for cover.

Meanwhile, MoneySupermarket.com has published separate research showing that 3.5 million homeowners are failing to insure their homes adequately against the threat of damage.

Around 1.5 million respondents to the survey said they only had contents insurance, while 1.3 million said they only had buildings insurance.

MoneySupermarket.com also found that people living in rented accommodation are under-insured, with a third of renters saying they had no insurance cover in place.

Half a million people could lose their disability benefit under Government plans.

The planned reforms will see the current disability living allowance replaced with Personal Independence Payment (PIP), a simpler allowance which is designed to be more focused.

Speaking to The Telegraph, Work and Pensions Secretary Iain Duncan Smith said that the number of people claiming disability living allowance has increased by 30 per cent, “rising well ahead of any other gauge you might make about illness, sickness, disability”.

Claimants will have to be medically assessed in order to qualify for the new benefit and it is estimated that this will result in a £2.24 billion saving for the government on benefit payments annually.

A medical assessment will be carried out on all existing disability living allowance claimants by 2016 and all those who are found to be eligible to receive PIP will be required to be re-assessed at regular intervals.

Disability living allowance is intended to cover the additional costs that disable people incur as a result of their condition.

This can be help with mobility, such as paying for wheelchair accessible vehicles, and support with personal care needs.

Disability living allowance costs the government around £13 billion a year, more than the cost of unemployment benefit.

The reforms are designed to reduce exploitation and abuse of the system, by ensuring that only those who need care and help with mobility can claim the new benefit.

A consultation on eligibility criteria for PIP is underway, with an announcement expected in the autumn.

While hundreds of thousands of people are expected to either lose their disability benefit altogether, or face a reduction in benefit, severely disabled people, including those with severe mental illness, may receive a higher amount under the new system, than they do at present.

Labour shadow work and pensions secretary Liam Byrne accused Mr Duncan Smith of approaching reform with “contempt and carelessness”.

While the coalition government is seeking to refocus on reducing the UK’s deficit, Prime Minister David Cameron has lost ground to Labour leader Ed Miliband in opinion polls.

According to a YouGov survey published in the Sunday Times, Ed Miliband now has a higher approval rating than David Cameron for the first time in a year.

The proposed welfare benefit reforms are unlikely to improve the coalition government’s popularity – when Tony Blair tried reduce disability benefits, the plan proved so controversial that he was forced to abandon it.

Homes by the sea have shown a greater price increase than inland properties, according to the latest figures from the Halifax.

The price of houses in seaside towns has increased by 97 per cent over the last decade, compared with a 95 per cent increase for the whole of England and Wales.

In Seaham, County Durham, the average property price increased by more than 180 per cent, from £38,443 in 2002 to £108,742 in 2012, according to the Halifax data.

Seaham topped the list for the biggest increase, followed by two Cornish towns – Wadebridge where the average price increased by 173 per cent over the decade to £348,986 and Padstow, with an increase of 171 per cent to
£382,806.

The most expensive seaside properties tend to be located in the South of England, with the ten most expensive seaside towns located on the south coast.

Eight of these are in the South West, with Salcombe in Devon topping the list for the highest average house price, at £528,920.

In contrast, the average price of a house in Blackpool, Lancashire, is just £104,747 and Newbiggin-by-the-Sea in Northumberland trails in at the bottom of the lost with an average house price of around £75,000.

Martin Ellis, housing economist at Halifax said: “The majority of seaside towns in Wales, East Anglia and the South West have an average house price that is higher than the surrounding area.

“But this is not always the case and good value properties can be found in many seaside towns in the South East and Yorkshire and the Humber in particular.”

The latest report from the Royal Institution of Chartered Surveyors (RICS) showed that the price of UK homes fell at their fastest pace for six months in April.

This was attributed to the end of the stamp duty holiday on lower priced properties.

The property market enjoyed a temporary boost at the beginning of the year prior to stamp duty being reinstated on properties up to £250,000 in value in March.

Supermarket retailer Sainsbury’s is leading the market at the moment with a 5.9 per cent loan rate, and it has also launched a Price Promise Guarantee.

The 5.9 per cent rate is available on a £7,500 loan with a three-year term, while the same loan over five years would be available at 6.1 per cent.

Under the retailer’s Price Promise Guarantee, if a customer successfully applies for a standard loan with Sainsbury’s but is then offered a better deal elsewhere, Sainsbury’s will undercut the better offer by 0.1%.

The guarantee only applies to Sainsbury’s standard loans between £1000 and £25,000 and is not applicable to Sainsbury’s Shopper Reward loans.

Claims under Price Promise Guarantee must be made within 28 days of receiving the original loan offer from Sainsbury’s and the guarantee will not apply when a loan agreement with Sainsbury’s has been accepted and signed for.

The latest figures from the Finance & Leasing Association (FLA), the trade body for the consumer credit industry, indicated an improvement in consumer credit markets.

There was a 9 per cent increase in lending to consumers in March this year, compared with March 2011.

The FLA’s figures cover personal loans, credit cards, second mortgages, car finances and store instalment credit.

The statistics suggests that people are using credit card more for both day-to-day living expense and for large purchases.

In March 2012, £2.8 billion was borrowed on personal loans and credit cards, an increase of 2 per cent from the same time last year.

The car finance market showed the most substantial growth, with an increase of 20 per cent compared with the first quarter of 2011.

Fiona Hoyle, Head of Consumer Finance at the FLA, said: “Our figures show a slight rise in most markets, which suggests that consumer confidence is showing signs of a tentative return.

“But many consumers continue to be cautious, reinforcing the need for the Government to make sure that their proposed changes to consumer credit regulation do not limit the supply of affordable, responsibly-provided credit.”

People who have received compensation after being mis-sold payment protection insurance (PPI) must pay tax on any additional interest on their payout.

It is believed that many victims of PPI mis-selling could be underpaying tax.

PPI was routinely sold alongside loans and mortgages in order to cover borrowers’ repayments if a change in circumstances meant they were unable to keep up the payments themselves.

Mis-selling occurred when PPI policies were sold without customers’ knowledge or to people who were ineligible under the terms of the insurance.

The compensation paid out to people mis-sold PPI policies includes an amount to cover the interest that would have accrued if the individual had never made the payments.

It is the interest element of the compensation that is taxable and to complicate the issue, this interest may or may not have had tax already deducted, depending on the type of company making payment.

HMRC has published information on its website on paying tax on interest from PPI compensation payments.

Banks have already paid out £1.9 billion in compensation and an estimated £5 billion is still expected to be paid out.

The flood of claims means that banks are having to significantly increase the provision they are making against PPI compensation claims.

Earlier this week HSBC said it was setting aside an extra £290 million, increasing its provision to £750 million.

RBS paid out an extra £125m in compensation claims over the first quarter of 2012, having already paid out more than £1bn.

Barclays paid out an extra £300m for payment protection insurance compensation in the first quarter, while Lloyds Banking Group set aside an extra £375m, taking its total to £3.6bn.

Banks have criticised claims management companies for sending in claims for customers who were never sold PPI, creating unnecessary processing costs.

The average balance in an easy access savings account soared by 18 per cent to £1,858 in the first quarter of 2012, according to the ING Direct Consumer Savings Monitor.

This is the highest level since the second quarter of 2010, when the typical balance in an easy access account was £2,050.

It also represents the first consecutive quarterly rise in savings since 2009.

The jump in savings may seem surprising, considering that the economy fell back into recession in the first quarter and unemployment figures remain high, but ING Direct suggest it is largely due to payment protection insurance compensation payouts starting to kick in.

Two million people are expected to receive payouts of around £2,600 this year and ING Direct has estimated that one third of the payments will be placed into savings accounts.

ING Direct suggests that the recent slump on the high street is also linked to the savings increase.

Richard Doe, ING Direct chief executive, said: “Six months of relatively restrained spending may not have helped the economy in terms of GDP growth, but it has allowed Britons to deliver on their determination to restore their savings.”

The report highlights consumers’ determination to reduce their debts despite the difficult economic climate.

Levels of unsecured debt, including credit cards, loans and overdrafts, increased by just £18 to an average of £2,242 in the first quarter.

Over 40 per cent of the respondents to ING Direct’s survey said they would use their PPI compensation to reduce their debts.

Meanwhile, research by investment specialist Skandia suggests that people need more savings now than they did two years ago, in order to consider themselves happy.

In 2010, 82 per cent of people said savings of up to £5,000 would make them happy, but in a survey carried out last month just 64 per cent said they would be happy with this amount of savings.

In 2010 92 per cent said savings of over £10,000 would give them peace of mind, but in 2012, 91 per cent said they would need savings of over £50,000 to give them peace of mind.