There was further evidence of a pick-up in the housing market today as figures showed mortgage lending remained on a firm footing during October, while approvals for house purchase rose to their highest level since May 2004. Mortgage lending during October rose by 7.6 bln stg, above the 7.4 bln increase forecast by analysts and above the 6-month average of 7.4 bln stg. Lending for September, however, was revised down to a 7.5 bln stg rise from the previous estimate of 7.7 bln. Meanwhile, the number of approvals for house purchases -- which are often seen as a good indicator of future demand in the property sector -- were at 113,000, the highest since May 2004 and above forecasts for 107,000. Within that, the value of approvals for house purchases rose by 13.6 bln stg from 13.3 bln stg in September, again the biggest rise since May 2004. "The approvals data will encourage speculation that house price inflation could begin to pick-up in the new year but we would be cautious about the extent of upside scope for house prices given their current elevated levels," said Ross Walker, economist at Royal Bank of Scotland. "Overall, further evidence of stabilisation in the residential property market and fairly neutral from a monetary policy perspective," he added. Meanwhile, the total value of mortgage approvals -- which also includes remortgaging -- rose by the largest amount since September 2003, increasing by 27.5 bln stg in October from 27.0 bln stg in September. The news adds to growing evidence that the housing market is picking up in the wake of the Bank of England's decision to cut interest rates in August for the first time in over two years. Further evidence of strengthening in the housing market will increase the likelihood that the Bank of England will leave interest rates on hold in the months to come. Most analysts though doubt that firmer market activity will lead to sustained increases in house prices any time soon, and that view was reinforced by the news from the Nationwide, the UK's biggest building society, that house prices were unchanged in November. "Not only is mortgage activity still well below recent past peak levels, but most affordability ratios are still stretched and will become more so if house prices start moving back up markedly," said Howard Archer, chief UK economist at Global Insight. "Meanwhile, the large number of available properties means that buyers still have significant choice, which helps their bargaining position," he added. Consumer credit remained subdued meanwhile, rising by just 1.3 bln stg in October after a rise of 1.2 bln in September and in line with analysts' forecasts.