The number of mortgages approved for home purchases by the big British banks continued to recover between May and June, but was still well down on June last year.

The British Bankers Association said yesterday that approvals - loans agreed but not yet paid out - rose last month to a 12-month high of 70,750, up from 67,702 in May. But that was still 20 per cent short of the from 88,859 mortgages approved last June.

The BBA's numbers for approvals are not adjusted to reflect seasonal patterns in the housing market, so can be volatile from month to month.

Confirming a preliminary figure from last week, the BBA said that underlying seasonally adjusted net mortgage lending - allowing for repayments - rose by £4.6 billion during June, marginally ahead of May's £4.5 billion, but well short of £5.6 billion lent to home-buyers in June,

2004.

"Higher volumes of loan approvals in June mirror the stronger seasonal pattern showing there is stable underlying demand for loans," said the BBA's director of statistics, David Dooks.

Credit card lending by the banks rose by a seasonally adjusted £295 million last month, sharply up on an increase of £122 million in May and the biggest monthly total since January.

At first sight this appeared to mirror a surprise 1.3 per cent recovery in retail sales in June reported last week by National Statistics.

Mr Dooks pointed out, though, that other forms of unsecured personal credit - through loans and overdrafts - edged only £75 million higher, the smallest monthly increase since December, 1994.

"If June's higher credit card lending was a reflection of consumer spending, then it was offset by very low demand for loans and overdrafts," he commented. These measures often fluctuated as consumers find it easy to switch between different forms of credit. he added.

The overall picture for unsecured lending was " subdued".

"If June's higher credit card lending was a reflection of consumer spending, then it was offset by very low demand for loans and overdrafts," Mr Dooks added.

"The overall picture is one of subdued unsecured lending."