Loans to homebuyers are up 77% on last year but construction and property firms are borrowing less

Last month the number of house purchase mortgages approved by banks reached its highest level since March last year, according to new figures from the British Banking Association (BBA).

The number of approvals, at 42,088, was 77% higher than a year earlier, in September 2008, and represented a rise of 3% on the August 2009 figure.

The value of house purchase mortgage loans approved edged up marginally on the previous month, from £5.8bn to £5.9bn.

However, September continued the recent trend for low levels of lending to construction and real estate companies.

Construction firms last month paid £500m more back to banks than they borrowed, taking total lending to the sector to £20bn. Real estate, renting and other business services companies paid back £2.1bn, leaving them with £151bn of loans outstanding.

BAA statistics director David Dooks said: “Mortgage lending by the high-street banks is continuing to improve from the lows seen earlier this year, and the number of house purchase approvals continues to recover. Housing market activity will depend, however, on more properties coming on to the market.

“Lending to companies continues to be affected by current trading conditions. In perhaps the hardest-hit sectors, related to commercial property and construction, lending levels continue to fall and company borrowing in general remains subdued.”