Although the activity is still well below pre-recession levels, the number of mortgages approved for home purchase by Britain’s major high street banks rose by 7pc to 38,181 in July, which is more than double the low point in November.

According to the British Bankers’ Association (BBA) data, this was the highest number of approvals since February 2008, as compared with 35,564 in June.

The level of monthly approvals is still well below the long-term average of almost 61,000 per month since 1997, but the approvals have increased 72pc over the year, which is the biggest annual rise since records began in the late 1990s.

With £1.6bn advanced by BBA’s members in July, the net mortgage lending was also at its lowest level since October 2000.

According to a senior economist at the Royal Institution of Chartered Surveyors, Brigid O’Leary, while it is encouraging that these numbers have continued to improve, they do not disguise the fact that the housing market is still in a fragile state and that mortgage activity is still limited.

Loans to non-financial companies fell by £4.1bn in July, which is the largest drop in the downturn, with loans outstanding at £345bn.

The BBA said that about half of the decrease reflected the unwinding of short-term positions within the public administration and defense sectors. The large companies have continued to refinance borrowing with funds raised on capital markets and demand is subdued across most industries.

Business bank financing remained on "a very disappointing trend," and could result in more action from the Bank of England’s Monetary Policy Committee (MPC). If the data on money and credit continues to show little sign of improvement, there will be greater chances of a quantitative easing extension in November.

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