The number of mortgages approved for house purchase increased for the third month in a row during February, figures showed today.

A total of 28,179 loans for people buying a home were approved during the month, up from 24,278 in January and a low of 17,878 reached in November, the British Bankers' Association said.

But the figure was still 31% lower than it had been in February last year, and the group cautioned that the rise reflected the greater market share of the high street banks, rather than an increase in demand from consumers.

There was also a rise in net lending, which strips out redemptions and repayments, with this increasing to £3.9 billion during the month, up from £3.4 billion in January, although it remained well down on the £5.1 billion recorded 12 months ago.

But the total value of all mortgages advanced, including people remortgaging, fell slightly to £9.2 billion - its lowest level since June 2001.

There was also a slight fall in the number of loans approved for people remortgaging, with 28,746 mortgages arranged for people switching to a better deal, 5% fewer than during the previous month and 59% down on a year earlier.

Remortgage volumes are being hit by record low interest rates as many homeowners find it is cheaper to stay on their lender's standard variable rate when their current deal comes to an end, rather than take out a new mortgage.

David Dooks, director of statistics at the BBA, said: "Most new mortgage lending is being done by the high street banks but demand is, of course, being moderated by the impacts of the recession.

"Remortgaging activity has slowed in recent months, while higher numbers of loans approved for house purchase simply reflect banks' greater market share."

Estate agents have been reporting a rise in Inquiries from potential buyers, who are being attracted back to the market by low interest rates and the house price falls seen so far.

But it is thought unlikely that this pick up in interest will translate into sales while the mortgage drought continues and the recession puts people's jobs at risk.

Unsecured lending remained subdued during February, with outstanding credit card debt rising by £112 million - just under half of January's rise.

Consumers also repaid £269 million more on overdrafts and personal loans than they borrowed during the month.

There was also a further fall in the amount of money people had saved, with deposit levels dropping by £73 million in February, following January's record fall of nearly £2 billion.

The reduction is likely to reflect the record low level of returns currently available on savings accounts, causing people to shift their money to higher yielding investments.

It also partially reverses the £8 billion in-flow of savings seen during November and December.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said the figures showed that the increase in buyer inquiries was now feeding through into actual transactions.

He said: "Even so, the actual level of activity still remains not that far away from historic lows and it would be premature to conclude that some semblance of order has returned to the housing market.

"Mortgage finance remains difficult to obtain and typical loan-to-value ratios are making it challenging for first-time buyers to access the market."

But Howard Archer, chief UK and European economist at IHS Global Insight, said: "The rise in mortgage lending by the banks does not indicate a significant pick-up in activity.

"Not only is mortgage activity still very low compared to long-term norms on the BBA measure, but the recent limited rise is primarily the consequence of banks increasing their market share.

"Indeed, overall, there is still little evidence of housing market activity improving significantly despite surveys showing that buyer inquiries have picked up in recent months."