Banks appear to be cautiously increasing their mortgage lending, according to the latest data from the British Bankers' Association, but lending rates are still well below those at the peak of the market.

Banks appear to be cautiously increasing their mortgage lending, according to the latest data from the British Bankers' Association, but lending rates are still well below those at the peak of the market.

The industry approved 35,235 loans in June, according to the seasonally adjusted figures, up 64.7% on the same month in 2008 and the highest monthly figure since March 2008.

But it is still less than half the number supplied at the peak of the credit bubble in September 2006 when 70,953 loans were approved.

The average amount the banks are willing to lend remains subdued. It lent an average of £136,400, continuing the upward trend from the end of last year but still 7% less than at its peak.

BBA statistics director David Dooks said: "Numbers of new home loans approved by the high street banks are recovering from the very low level of last November and so far this year, gross mortgage lending has topped £50bn.After repayments and remdemptions, the banks' net rise in mortgage lending of £18bn in the first six months is in sharp contrast to lending by the rest of the market which is still contracting."

However, the increases are from an extremely low base and analysts worry that with unemployment rising it could take some time before house prices reach their bottom.

The BBA figures show a continued reticence among banks to lend to some parts of corporate Britain. Lending to non-financial companies declined by £600m in June with manufacturing and wholesale and retail trade particularly squeezed with declines of £400m each.

However, total company finance increased by £6.5bn to £794bn after lending to financial companies increased dramatically.

Credit remains tight globally. International bank lending dropped again in the first quarter of the year and shrank by over $6trn in the year to the end of March as the financial crisis restrained credit, according to Bank for International Settlements (BIS) data also published yesterday.

Lending contracted by $1.5trn in the January to March quarter at current exchange rates, or over 4%.

The pace of decline did slow from the worst contraction for at least 30 years in the previous quarter, however, and much of the latest drop was due to currency moves.

International lending had been rising steadily over the last three decades but has fallen back since March 2008.