Figures from the British Bankers’ Association showed 42,238 mortgages for house purchase were approved in October, up from 42,073 the previous month and 98 per cent higher than a year earlier.

It said mortgage lending, which strips out redemptions and repayments, also rose, by 4.6 per cent year-on-year to £3.1 billion in October.

David Dooks, BBA statistics director, said: “The longer it takes to emerge from recession, the longer we will see households and businesses continue to borrow with caution.

“The banks’ mortgage lending, still growing by more than 4 per cent a year, shows one aspect of consumer behaviour but unsecured borrowing is subdued and people are building up deposits.”

Lending figures remain a considerable way off the average number of mortgages approved of around 55,000 three or four years ago.

And experts warn that mortgage lending is unlikely to continue rising substantially next year.

Ed Stansfield, a property economist at Capital Economics said: “The surge in pent-up demand among cash-rich buyers, released in the early stages of 2009, appears to be fading. Still-tight lending criteria coupled with a weak economic outlook suggest there is little prospect of a marked rise in mortgage demand next year.

“With activity levels still depressed and the housing market still overvalued, we remain sceptical that the recent upturn in house prices will be sustained, let alone extended through 2010.”

Government-backed banks raised mortgage rates and introduced stricter lending criteria last week amid concerns that this year’s house-price recovery is not sustainable.

Northern Rock, which has boosted lending in recent weeks, increased its market-leading five-year fix for remortgages from 4.99% to 5.39%, while the equivalent deal for homebuyers went up ...   more »