Mortgage approvals soared to their highest level in three-and-a-half years in May, although lending to businesses continues to shrink, official figures showed.

There were 58,242 mortgage approvals for house purchases in May, worth a total £8.7 billion, the Bank of England’s Money and Credit survey showed. That was up from 54,354 in April and the highest level since December 2009.

But loans to non-financial firms fell by £1.3 billion in May, including a £452 million drop in lending to small and medium-sized companies. However, that was an improvement on a £3 billion fall in business lending in April.

The home loans figures reflect an improving housing market – boosted by the Funding for Lending and Help to Buy stimulus schemes.

Economist Howard Archer said the figures echo evidence that housing market activity “may finally be really stepping up a gear”.