The British Bankers Association has released new figures showing that the annual growth in bank's net mortgage lending reached 3.9 per cent in September, up from 1.0 per cent in August.
The BBA said that "subdued spending" had kept consumer demand for unsecured credit down, dropping 1.6 per cent in the last year.
Gross mortgage lending in September was reported as falling 10.8 per cent from last year to £8.0 billion, while net mortgage lending rose £1.6 billion from the previous September.
September house purchase approvals fell in September, thanks to weakening demand, with average house prices falling again to £142,900. Despite the fall on a monthly basis, house prices were still on average 4.1 per cent higher than a year ago.
David Dooks, Statistics Director of the BBA, said, "Subdued mortgage activity and little demand for unsecured credit are a reflection of household uncertainties ahead of this week's Spending Review. Demand for new mortgages remains low despite more properties on the market and falling house prices.
"Business borrowing continues to reflect weak demand combined with companies reducing gearing by repaying bank borrowing."