Approvals were also stronger at £1,677m compared to £1,389m in February – a 21% increase.
Net lending by mutuals in March 2010 was -£764 million compared to -£863m in February.
Adrian Coles, BSA director-general, says: “Lending activity appears to have gained some momentum following a sluggish start to the year, and the relatively strong approval figures bode well for coming months.
“However, the mortgage market will remain fragile as there is uncertainty in relation to employment, interest rates, house price inflation, mortgage availability and, conceivably even after the election, the political outlook.”
In the savings market, balances held in savings accounts at mutual institutions increased by £534m in March compared to an increase of £807m in February. If interest credited to accounts is excluded, mutuals had a net withdrawal of £318m February.
Coles adds: “Savings balances grew for the second consecutive month in March, although mutuals saw a net withdrawal if interest is excluded, having seen a net receipt in February.
“The mutual sector continues to offer some of the most consistently competitive savings rates, but people may instead consider making additional mortgage payments or using savings to support their incomes in this challenging economic climate, or they may be looking to invest in the equity markets.”