CORRECTED-UK Sept mortgage approvals hit highest level since Feb 2008
(Corrects interest rate on new mortgage lending in paragraph 7 to 3.08 pct from 3.30 pct)
LONDON Oct 29 (Reuters) - British lenders approved the highest number of mortgages since February 2008 last month, in a further sign that the property market was gathering steam even before the government launched a scheme to aid home-buyers.
The Bank of England said mortgage approvals for house purchase numbered 66,735 in September, rising from an upwardly revised 63,396 in August. Analysts had forecast a reading of 66,000.
This was the highest reading since the financial crisis tipped Britain into recession in the middle of 2008, though it is still well below a long-run average of around 90,000 mortgage approvals a month.
Earlier this month Britain's government brought forward the second stage of its Help to Buy scheme, which offers lenders insurance against the risk of giving mortgages to borrowers with deposits of as little as 5 percent of a house price.
The programme has been criticised by the opposition Labour Party and many economists as risking simply pushing up house prices, rather than increasing house-building.
Mortgage lending has already been rising steadily for the past year, bolstered by an improving economic outlook and an earlier government scheme, Funding for Lending, which offers banks cheap finance if they increase net lending.
A separate BoE release showed that the effective interest rate on new mortgage lending fell to its lowest since records began in 2004 in September at 3.08 percent. Interest rates paid on new savings were also at a record low.
Average house prices are now up by around 6 percent on a year ago, though the rise is most marked in London, where prices are up 10 percent, and in other parts of Britain prices are rising by less than the rate of inflation.
The BoE said net mortgage lending - which lags trends in approvals - rose by 1.032 billion pounds in September, little changed from August, while unsecured consumer lending grew more slowly than forecast, rising by just 411 million pounds, its smallest increase since June.
Economists had forecast rises of 1.2 billion pounds and 700 million pounds respectively.
Lending to businesses picked up after a sharp fall in August, rising by 720 million pounds, its biggest increase since January. But within that, lending to small businesses fell by 383 million pounds.
The BoE's preferred gauge of money supply, M4 excluding intermediate other financial corporations, rose by an annual rate of 4.3 percent, the same as in August. (Reporting by David Milliken and Shadi Bushra)
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