The British Bankers’ Association (BBA) said that the number of loans approved for house purchase rose to 47,365 in February from 33,541 the previous month. This was the first increase in loan approvals for eight months.

However, the figure was still 35 per cent below levels in February 2004.

The BBA, which records around two-thirds of all mortgage approvals, said that the data suggested that the declining trend in housing activity may be bottoming out.

David Dooks, the BBA’s director of statistics, said: “We have seen the start of the seasonal upturn in loan approvals, albeit from a very low point in the case of house purchase loans, so it will be important to see how strong the usual spring impetus will be in the coming months.”

The BBA said that underlying net lending secured on houses rose by £4.8 billion last month, up from £4.2 billion in January but below the £5.3 billion increase recorded in February 2004.

George Johns, of Barclays Capital, said that the BBA’s figures implied a total increase of 82,000 mortgage approvals across the country, up from 79,000 in January, which he said was consistent with house price inflation falling to 5 per cent by the summer.

“Today’s approvals figures tie in nicely with other recent data on the housing market that show that activity is stabilising, rather than slowing sharply,” he said.

“It is hard to envisage a collapse in house prices (or) house price inflation,” he added.

Last week Mervyn King, the Governor of the Bank of England, told MPs that both price and activity indicators from the housing market suggested that the pace of the downturn had eased. He said prices were broadly flat.

While the BBA data brought good news for the housing market, they presented an altogether gloomier picture of household spending.

The amount outstanding on credit cards rose by £69 million in February, the smallest increase since May 2002.

The BBA said that weak growth in credit card lending was driven by lower spending among consumers.

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