The British Bankers’ Association (BBA) has reported gross mortgage borrowing of £9.9bn in October, higher than in September and some 32% higher than in October last year.

The trade body said that higher capital repayment (including homeowners moving between lenders) continues to generate the contractions in borrowing stocks seen over the past year and explains the subdued picture of net borrowing.

BBA statistics director, David Dooks, said: “The housing market continues to pick up. October’s new mortgage borrowing was 32% higher than in October last year and approvals for house purchase were 33% higher.

“Improving consumer confidence is also leading to the banks seeing higher demand for personal loans.”

Duncan Kreeger, director of West One Loans, said: “Over the last 12 months UK banks have performed a sharp U-turn in their mortgage lending. And the pace of that about-turn has been phenomenal. But now attention is quite rightly turning to who they lend to – why – and much more often – why not?

“Sadly progress for business customers stalled in October. In fact, support from mainstream banks for everyday businesses has gone into reverse. So while it’s encouraging that British banks are generally more solvent and generally lending more than they were a year ago, there’s still a lot left to do. Progress is happening, but it’s not fast enough for many small business customers who have the potential to generate wider growth.

“Today’s government review of practices at Lloyds and RBS towards their small business customers only confirms the scale of the problem. That’s why many businesses no longer even bother to ask their high street banks for help investing for the future – and why alternative SME finance is at an all-time high.”