There were £2.5 billion of mortgages approved by mutual lenders in September, up 22% on August 2011 and up 33% on September last year.

There was also a 18% rise in mortgage approvals for the first nine months of 2011 at £17.1 billion and a 4% rise in gross mortgage lending in September, up to £2.3 billion from £2.2 billion in September 2010.

There was a 14% increase in gross lending for the first nine months of 2011 at £16.7 billion.

Meanwhile, savings balances were up £0.6 billion in September 2011, compared to a decrease of £0.6 billion in September 2010.

Adrian Coles, director-general of the Building Societies Association, said: “Although the UK economic outlook remains challenging