Mortgage lending picked up slightly in September but remained near record lows as the housing market continued to be gripped by the seizure in the home loan market.

Some 23,422 mortgages for house purchase were approved by British banks last month, up from a record low of 21,342 in August when summer holidays helped push figures down.

There was also a glimmer of more positive news as estate agents reported a slight rise in sales for the month. Each agent sold an average of six properties in September, up from five in August — the first rise since January, according to the National Association of Estate Agents.

However, mortgage lending in September remained near the lowest on record and is below the six-month average of 27,481, the British Bankers' Association's (BBA) figures show.

Previously, the Council of Mortgage Lenders said that total lending by banks and building societies last month fell to a three-year low of £17.7 billion.

The BBA said banks approved mortgages worth £11.2 billion, up from £10.2 billion in August, but gross mortgage lending in the month fell to £11.6 billion, down from £13.3 billion in August.

Larger banks have benefited from the financial turmoil as they have been able to rely on their large pool of deposits to help fund mortgages.

Howard Archer, chief UK and European economist at Global Insight, said: "The BBA data does little to dispel the view that housing market activity continues to be suffocated by very tight lending conditions and still-stretched affordability ratios.

"Housing market activity and house prices seem poised for further weakness as the fundamentals remain largely unfavourable."

The BBA said that net lending on credit cards rose by just £100 million, down from £400 million in August.

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