Fresh rise in mortgage approvals

The figures suggest more people are interested in buying a house

The number of new mortgages approved by lenders, but not yet lent, has risen to its highest level since June 2004.

Figures from the Bank of England show that lenders approved 107,000 new mortgage loans in September.

That was slightly higher than the downwardly revised figure of 106,000 for August.

Approvals are a good indicator of future trends and suggest the housing market may continue to revive after August's cut in interest rates.

Slowing credit growth

The amount of confirmed new mortgage lending also rose in September - up from £7.6bn to £7.7bn.

However, the amount of unsecured lending by people is slowing down along with the wider economy.

Bank of England figures show that consumer credit, such as loans, credit cards and hire purchase agreements, is growing at an annual rate of just 10.9% - the slowest rate of growth since November 1994.

"Consumer credit growth was again relatively muted in September, pointing to continuing consumer caution," said Howard Archer, economist at Global Insight.

"This reinforces our belief that consumer spending will remain subdued for some time to come despite September's pick-up in retail sales."

Prices subdued.

While the volume of activity in the housing market has revived after the sudden slump in the summer of 2004, house prices are still slowing down.

Earlier this month the Halifax bank, the country's biggest mortgage lender, said annual house price inflation in September stood at just 3%.

That was much lower than the 22% inflation rate seen in September last year.

Alan Clarke, UK economist at the investment bank BNP Paribas said: "The key message is housing market activity has improved significantly into the second half of this year and confirms the downside risks to growth from the housing market are vanishing."