The number of mortgages approved in May hit a 13-month high, figures as buyers return to the market, figures from the British Bankers' Association reveal.

The figure was also up 16 per cent on the same month last year, which is the first time a year-on-year comparison has shown an increase since November 2006.

Even so, the ongoing weakness in the remortgage market dragged down the overall lending figures, with total advances of £7.7 billion the lowest since February 2001.

Net mortgage lending, which excludes repayments and redemptions, fell for the third month in a row and was at £2.3bn - the weakest monthly rise since early 2001.

Despite being down for the fifth month in a row, the BBA said loans for remortgaging and other purposes like equity release or buy-to-let, seemed to be stabilising at their current low level.

BBA statistics director David Dooks said: 'Steady monthly increases since last November have seen the number of loans approved for house purchase recover to levels seen in early 2008, although gross and net mortgage lending show a subdued wider mortgage picture.

"However, unlike much of the mortgage market, the high street banks are still seeing lending growth and improved mortgage availability is reflected in higher average loan approval values.

"Consumers' borrowing appetite remains weak, reflecting uncertainty over household circumstances, so credit growth is negligible and spending activity on credit cards is down on this time last year. Lending to non-financial companies was little changed overall in May."

The jump in the number of mortgages approved does suggest that buyers are returning, attracted by low interest rates and what are seen as drastically reduced property prices.

As a result of this, and a remaining dearth of good quality properties, prices are generally reported to have risen last month.

However, while the appetite is clearly there among buyers, the most likely brake on a recovery is still likely to be the availability of affordable mortgages.

The pick up in lending is, we believe, likely to remain extremely fragile for several months to come and in fact credit could actually tighten further.

In fact, this trend is already evident in fixed rate mortgages being offered. Barclays, which offers its products through the Woolwich, is just the latest to raise it's fixed rates.

Nationwide, Northern Rock, Abbey, Halifax and Lloyds TSB have all raised selected fixed rates.

With rates at historic lows, trackers remain tempting, but the trend in interest rates can only really be up, so a fixed rate of 5 per cent or under is probably going to look attractive in the months ahead.

The BBA figures also show that consumers continued to focus on paying off debt in May and delivering continues apace.

A total of £6 billion was spent through credit cards in May, which was down 11 per cent on the same month a year ago. Most significantly, £6.4 billion was repaid. This means that outstanding credit card debt rose by a mere £157 million in May, when interest and other charges are added in.

£249 million more was repaid on overdrafts and loans in May than was borrowed. This is the 10th consecutive month in which repayments have exceeded borrowings.

It seems that the ultra-low interest rates on offer from banks are making the choice to pay off debt rather than save an easy one. Personal deposits were up by a mere £476 million in May, compared to the £2.23 billion placed on deposit in May last year.

Meanwhile, the number of mortgages slipping into arrears in the first three months of the year was down 12 per cent on the same quarter last year to just under 60,000, the Financial Services Authority said.

Most of the fall was for non-regulated mortgages - generally buy-to-let and interest-only loans; but regulated mortgages going into arrears were also down slightly.

Repossessions were up by 13 per cent to more than 14,800 in Q1, 2009 - up from 13,100 the previous quarter in 2008. This increase is markedly slower than the 20 per cent plus in Q2 and Q3 last year.

The Council of Mortgage Lenders yesterday reduced its forecast for expected repossessions in 2009 to 65,000, that's down from an earlier forecast of 75,000.