The BBA’s monthly figures revealed an increase in approvals for mortgages for both property purchase and remortgaging last month.

It said that showed that the government’s Help to Buy equity loan scheme and Funding for Lending had given more first-time buyers access to funding from the mortgage lenders, stimulating activity across the housing market.

Gross mortgage lending from banks reached £9.3bn in August, the trade organisation said. This figure was up on July and also higher than the £8.4bn averaged over the previous six months.

Net lending (total lending minus repayments) continued to contract but the BBA said this was likely because borrowers were taking advantage of low interest rates and overpaying on  their mortgages each month.

Duncan Kreeger, director of West One Loans, said:

“There’s an optimism in the industry that’s been missing for five years, and members of the BBA are clearly feeling a renewed sense of confidence. Balance sheets are healthier and the “credit crunch” is gradually fading into history.

“But while simple mortgage lending is recovering, there are still big gaps in the availability of finance. This recovery in lending is jostling with a wider economic recovery – and the lesson from the financial crisis is that lending and financial reality – both types of growth – depend on each other.

“Lenders need to work together to fund the credit-worthy projects that are still struggling for finance.

“More credit cards, overdrafts, and other unsecured borrowing are perhaps a sign of a little healthy frivolity – but secured lending should be the main basis of reliable growth, as lenders still scramble to make up half a decade of lost time. And just as important, business lending is still trailing the wider recovery in lending, which will mean lost economic opportunities in the real world.”