The amount of approved mortgages for house purchase hit its highest peak for almost a year-and-half in July.

Buoyant buyers returned to the market in droves as a total of 38,181 loans were approved for people buying a home, which is a 77% increase compared to July 2008. The British Bankers' Association (BBA) revealed that the figures are the highest the property market has seen for 17 months.

Total mortgage advances also rose from £8.1 billion in June to £8.4 billion in July. But the BBA said that the figures are still below summertime expectations, despite the increase.

The new lending figures are being counterbalanced by people reducing their mortgage debt. Net lending, as a result, has fallen to £1.6 billion, which is the lowest it has been since October 2000.

Gross and net lending figures could be boosted by the improved mortgage approval ratings in the coming months, the BBA said. This is because slower market activity is delaying the figures from filtering through.

It added that the number of people remortgaging continued to be subdued, with only 30,600 loans arranged by people switching to a better deal during the month.

But the group said the figure appeared to have stabilised and was slightly up on both the previous month and the recent six month average.

The number of people withdrawing equity from their home or taking out a mortgage on a buy-to-let property continued to fall in July to reach its lowest level since October 1997 of 18,509.

David Dooks, director of statistics at the BBA, said: "The numbers of mortgages approved for house purchase each month by the high street banks have continued to recover from last November's low point, but new lending is largely being offset by repayments, so that net rises remain relatively weak.

"Unsecured borrowing is subdued, with households focused on managing their personal finances and building up deposits."

Credit card spending was unchanged from the previous month at £5.8 billion, while repayments were slightly higher at £6.2 billion, leading to outstanding plastic debt rising by £125 million once interest and charges are factored in.

Lending through loans and overdrafts remained weak, with people repaying £303 million more than they borrowed in July, the 12th consecutive month in which repayments have outstripped new lending.

Consumers also continued to boost their savings levels, depositing £2.5 billion in July, the second highest figure this year, on a seasonally adjusted basis.

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