Record amounts of cash have been paid into building society savings accounts during October, new figures show.

A total of £15.38bn was deposited in the month, as Northern Rock savers continued to look for new places to keep their money, according to the Building Societies Association.

Savings levels at building societies rose by £3.02bn once withdrawals are factored in - beating the previous record of £2.81bn set in September when the problems at Northern Rock first came to the fore.

The figure is also nearly four times higher than net deposits of £772m made in the same month of 2006.

Adrian Coles, director-general of the Building Societies Association, said: "It seems that the majority of these deposits are funds withdrawn from the Northern Rock bank, with the attractive savings products offered by building societies continuing to appeal to customers looking for the best home for their money."

The organisation also saw a revival in mortgage lending during October, with total advances hitting £4.65bn, their highest level for seven months.

Net lending, which strips out repayments and redemptions, reached £1.12bn, a total not seen since June.

But the figures are lower than October last year, when total advances were £4.94bn and net lending was £1.66bn.

There has also been a sharp drop in mortgage approvals, with new loans approved by building societies touching £3.66bn, significantly down on October 2006's level of £4.28bn.

The Council of Mortgage Lenders, which reports on lending by all groups, has seen a similar trend.

Total mortgage lending reached £32.36bn in October, nearly 6% more than in September and October last year.

But it said that this reflects applications and approvals that were made before the market was hit by funding problems.

CML director general Michael Coogan said: "The next few months will be a testing time as ongoing pressures in financial markets feed through into the wider economy.

"Funding constraints will continue to restrict lending activity and make loans more expensive.

"The Bank of England's recent quarterly inflation report reinforced the likelihood of a reduction in rates early next year, and that should provide some relief for borrowers sooner rather than later."

Copyright © PA Business 2007