BANKS and building societies ramped up mortgage lending over the summer in a sign that efforts to boost the flow of credit are having an impact.

The Bank of England said overall availability of secured credit to households increased significantly in the quarter to September, in contrast to previous expectations for little change.

However, most of the products were aimed at people with big deposits and the Bank noted that credit-scoring criteria tightened over the quarter. The overall availability of credit to the corporate sector was reported to have remained unchanged for small, medium and large companies.

The Bank of England and the Treasury’s £80bn Funding for Lending scheme was fired into action at the beginning of last month to unclog the flow of credit to households and businesses.

The Bank said it had seen an “early impact” of its scheme as borrowing rates begin to come down, but warned it might not be able to prevent total lending from falling over the next 18 months as wider global economic troubles continue to weigh on markets.

In its credit conditions survey yesterday, the Bank said mortgage availability is expected to increase further over the next three months, including to borrowers spread across loan-to- value ratios.

Vicky Redwood, chief UK economist for Capital Economics, said: “Overall, the outlook for bank lending is better than it was a few months ago, helped by the latest policy initiatives. Nonetheless, we think it will be a long and slow process to get credit flowing freely around the economy again.”

She described the outlook for business lending as “less than encouraging” and added: “Even if banks make more credit available, households may not want to borrow more.”

The Bank’s survey said tough wholesale funding conditions have dragged credit availability down over the past year, but that lenders have recently seen some improvement. Lenders said demand for credit from small and large businesses has recently fallen, while demand from medium-sized firms has held up.

A lack of merger and acquisition activity and capital investment amid the mood of caution stemming from the eurozone crisis were cited as underlying factors for the falls in demand.

The quarterly report asks lenders about trends over the past three months and their expectations for the coming three months.