The property market showed signs of stabilising last month after figures today revealed a surprise increase in January house purchase mortgage approvals and a hike in remortgaging activity.
The British Bankers' Association (BBA) said the number of mortgages approved for people buying a home by the major banks rose to 44,288 last month - higher than expected by analysts and an improvement on the record low seen in December.
The number of remortgage approvals also rose to 79,016, up 17 per cent on December and up 39 per cent year-on-year as a raft of borrowers came off two and three year fixed rate deals, according to the BBA.
Remortgaging activity hit its highest monthly share of all mortgage approvals since the BBA began collecting data in 1997, at 49 per cent.
A total of £18 billion was advanced to consumers during the month, up from £15.5 billion in December, although the figure was down 4.7 per cent on a year earlier.
Allan Monks, economist at JP Morgan, said the figures gave "a strong hint" that housing activity is beginning to stabilise.
"The rise provides some tentative signs that we may be close to the bottom of the current slowing in house purchase activity," he said.
But he warned there could be further gloom for the housing market.
Figures today from property information group Hometrack also showed that house prices fell for a fifth month in a row during February, suggesting that activity is still slowing.
Underlying mortgage lending rose to £5.2 billion in January from £4.9 billion in December, up 13 per cent year-on-year, thanks in part to the remortgaging boost.
The BBA said the figures suggested the credit crunch had failed to affect the ability of the major banks to lend.