By Rachel Wait

Gross mortgage lending in December came to a total of £9 billion, making it the strongest month of last year. It was also up 7% from the £8.4 billion lent in November 2011 and some 12% higher than in December 2010, according to the British Bankers' Association (BBA).

The improvement in mortgage lending was driven by a small upturn in house purchase approvals in the second half of 2011. However, net mortgage lending (gross lending excluding repayments and redemptions) only increased to £0.7 billion in December from £0.5 billion in November.

Approval activity last year remained similar to that of the previous two years. The number of house purchase applications approved in 2011 was very similar to 2010, but remortgage approvals rose 3% in 2011.

There were 36,171 house purchase approvals in December last year, worth £5.3 billion, compared to 34,809 the previous month, worth £5.1 billion. Remortgage approvals stood at 21,164 (worth £2.9 billion) in December and 21,788 in November (£2.8 billion).

Meanwhile, the average house purchase value of £145,200 remained similar to a year before.

David Dooks, BBA statistics director, says: "December's £9 billion of new mortgages was the strongest month of last year... However, at the same time, the household sector generally focused on debt repayment amid inflated household expenses and a continuing air of uncertainty, so we see a reluctance to let net borrowing rise, with people preferring to use their bank account cash for expenditure."