Gross lending by building societies was £1,605 million in September compared to £1,493 million in August. However, activity remains considerably more subdued than a year earlier.
Commenting on the lending figures, Adrian Coles, BSA Director-General, said: "Lending activity has recovered in recent months, when compared to the start of the year, as buyers and sellers tentatively return to the market. However, lending is still at levels much below that of previous years, and the slight recovery remains fragile.
"A further constraint on lending remains the conditions in mortgage funding markets, although wholesale markets have shown signs of opening up slightly."
In the savings market, balances held in savings accounts at building societies reduced by £511 million. Excluding any interest added to accounts, building societies experienced a net withdrawal of £895 million in the month.
Commenting on the savings figures Mr Coles said: "The amount of savings held with building societies decreased in September. Savers face very challenging conditions, with the Bank Rate set to remain at its current low level and the labour market weakening further.
"While these factors are affecting all deposit takers, institutions that have explicit Government backing should ensure that they do not exploit this unfair advantage and distort competition."
