Lending to small and medium sized enterprises increased at the fastest rate in two years in June according to official figures, which may indicate credit conditions are improving for small and medium enterprises (SMEs).

The Bank of England reported that lending to non-financial SMEs net of repayments increased by £238 million in June.

The increase in lending was the biggest since the bank stared compiling figures in the current form in May 2011.

It was only the third monthly increase in lending to SMEs recorded since then.

Overall lending to non-financial companies of all sizes fell by £1.3 billion in total in June.

The increase in lending to SMEs was welcomed as a sign that life may be getting easier for such firms. There have been repeated claims that many SMEs have been finding it hard to access credit on affordable terms.

The problems SMEs have faced raising funding have compounded the challenges posed for them by the long economic slowdown in the UK.

"The rise in net lending to SME's in June fuels hopes that banks are now becoming more prepared to lend to small businesses as the economic environment looks brighter," said Howard Archer, UK economist at IHS Global Insight.

Mr Archer said the increase also suggested that official efforts to encourage banks to increase the supply of credit, through the Funding for Lending scheme, are starting to have an impact.

The rise was recorded in the second month after the Treasury and Bank of England extended the Funding for Lending scheme by a year, to January 2015, and "heavily skewed" the incentives to boost net lending towards SMEs.

Information on lending activity in the months following the launch of the scheme in August last year had provoked concern that it was helping reduce the cost of funding for large firms that may have got credit anyway rather than SMEs.

The scheme also boosted the supply of funding for mortgages.

The Bank of England reported net mortgage lending increased to a 14-month high of £981m in June from £466m in May.

But lending to large non-financial businesses fell by £1.5bn in June, compared with a fall of £585m in May.

Mr Archer said while the fall in overall lending was disappointing, many larger companies were using other means of accessing capital, such as bond and equity markets.

Bigger fish with strong balance sheets are likely to have been quicker to respond to signs that the economic recovery has been gathering pace this year than smaller fry.

The increase in lending to SMEs in June may indicate that more SMEs are feeling confident enough to take on loans and overdrafts.

Other figures suggest consumers remain nervous about taking on debt.

The Bank of England reported that unsecured consumer credit increased by £489m in June, less than half the £1.1bn monthly average recorded from 1993 to 2007.

Unsecured credit increased by £781m in May.

The number of mortgage approvals for house purchases fell from 58,071 in May to 57,667 in June.

But this was up by 21.5% on June 2012.

The number approved for remortgaging fell to 31,486 in June from 32,209 in May.