The number of
mortgages approved for house purchase rose for the fourth month in a row during May.
Bank of England figures revealed that a total of 43,414 loans were approved for people buying a home, up 10% from May last year.
But net lending dived to £324m, after there was a fall in the number of homeowners remortgaging.
It is the lowest figure since the Bank began collecting statistics in this format in April 1993.
Chief economist at IHS Global Insight Howard Archer said: "The further, but limited, rise in mortgage approvals in May adds to now widespread evidence that housing market activity is trending up gradually.
"Nevertheless, it is still weak compared to long-term norms. Consequently, we still suspect that house prices will fall by another 10% from current levels to trough around mid-2010.
"However, we acknowledge that there is an increased possibility that this could be too pessimistic a view."
Total advances, which include all types of mortgage lending, were less than half the £23.81bn lent during the same month of 2008.
Low standard variable rates and the high levels of equity demanded by lenders mean many people are better off staying where they are, when their deals run out.
The record low lending is also down to a 20% fall in house prices since the downturn began.
Ultimately, the current financial climate has made people unwilling or unable to unlock additional equity from their homes when they remortgage.
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