Mortgage approvals in June hit their highest level in more than a year further boosting hopes that the worst of the downturn in the housing market is over.

The Bank of England said that approvals for home loans totalled 47,584, up from 44,169 in May — the highest level in 14 months. Analysts had expected a figure of around 47,000.

However, the data was offset by much lower than expected mortgage lending, which totalled just £343 million, compared to economists' forecasts of £600 million.

Total consumer lending was also at its weakest since the Bank started to collect data in April 1993.

The approvals data is the latest in a series of surveys which have boosted hopes that the housing market is bottoming out. Earlier this month, figures from the Land Registry showed that prices rose between May and June for the first time in 18 months.

Separate figures from the Council of Mortgage Lenders also out this month showed that gross mortgage lending hit a six-month high of £12.3 billion in June, up 17 per cent from £10.5 billion recorded in May.

Howard Archer, chief UK and European Economist at IHS Insight, said: "It is mortgage approvals that are seen as the key forward looking indicator for housing market activity.

"The Bank of England data indicates that the ongoing gradual upward trend in housing market activity remains intact.

"Nevertheless, even in June, housing market activity was still very low by past norms and at a level typically consistent with falling house prices."

Despite the rise in mortgage approvals, the Bank's figures showed mortgage lending in June was far lower than expected at £343 million, not far off May's record low of £331 million.

Total consumer lending was also extremely weak with banks, building societies and other financiers lending individuals a net £414 million pounds for home purchases and short-term borrowing — just one tenth of last year's net new lending and down from £485 million in May.

Vicky Redwood, UK economist at Capital Economics, said: "There is still little sign of the pick-up in bank lending growth that we think is necessary for a strong and sustained recovery in the wider economy."

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