The British Bankers Association has said that net mortgage lending by banks grew significantly in August.

According to the BBA the annual growth in net mortgage lending was 4.1 per cent, well above the 1.0 per cent growth reported for the mortgage market in July.

In August gross mortgage lending was reported as being £8.1 billion, 7.6 per cent lower than in the previous year.

House purchases approvals in August were weaker, due in part to low demand. The average value of house purchase approvals dropped in August to £143,500, but was still 3.8 per cent higher than in the previous year.

The BBA said that strong mortgage repayments to high street banks meant that net mortgage lending rose by £2.5 billion.

David Dooks, BBA Statistics Director, said, "The on-going contraction in net lending to business masks the reality of finance available. Bank of England research shows that there is around £25billion of new lending to business quarter on quarter, but this is being more than offset by businesses paying down debt as part of their balance sheet management and cost containment.

"Demand for mortgages continues to be weak despite more properties reportedly coming on to the market. Even with stable or falling house prices the current economic climate makes it unlikely that demand will pick up in the near future."