Mortgage approvals for house purchases rose in September for the first time in more than a year, but remained near record lows, new figures from the Bank of England show.

The Bank said mortgage approvals for new house purchases rose to 33,000 last month from a record low of 32,000 in August, the first rise since June 2007, but at the second lowest level recorded since the series began in 1993. The level is also more than 67 per cent lower than the 101,000 mortgages approved in September last year.

Economists said the slight upturn in approvals did not indicate a recovery. Howard Archer, of Global Insight, the economic consultancy, said: "This is another very weak set of Bank of England mortgage approvals and lending data that suggests that the downturn in housing market activity and prices still has a long way to run."

Vicky Redwood, of Capital Economics, said that the lack of activity in the market did not bode well for future house prices. "At this level, the figures are consistent with annual house price inflation of between -20 per cent and -25 per cent, compared with the current rate of -13 per cent or so."

Total mortgage lending rose by £2.2 billion last month, below the six-month average growth of £3.5 billion. August's figure was revised to show a net repayment of nearly £700 million, suggesting that mortgage lending was so low that it was offset by people making repayments on their existing loans.

The data is unlikely to change expectactions that the Bank of England's Monetary Policy Committee will cut interest rates next month, after a 50-basis point reduction to 4.5 per cent this month that was accompanied by co-ordinated rate cuts by the world's leading central banks.

Mr Archer said: "On the positive side for the housing market, the Bank of England seems likely to cut interest rates more aggressively as a consequence of the now-deep economic downturn. Indeed, it looks very possible that interest rates could fall from 4.5 per cent to 3.5 per cent by the end of 2008 and all the way down to 2 per cent in 2009."

Consumer credit rose by just £251 million in September, the weakest rise since February 1994, and supported anecdotal and survey evidence that consumer spending is weakening.

Annual broad money supply growth picked up to 12.4 per cent last month from 11.5 per cent in August, the sharpest rise since January.

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