UK banks step up pace of mortgage approvals - BBA

LONDON,(Reuters) - British banks approved more mortgages in October than a month before, taking the annual growth rate to the highest since April 2014, while personal lending expanded by the largest amount since March.

Banks approved 45,437 mortgages for house purchase last month, up from 44,825 in September and 21 percent higher than a year earlier, the British Bankers' Association said on Wednesday.

Net lending for personal loans and overdrafts rose by 228 million pounds in October, the biggest net rise for a month of October since 2006 and news that comes a day after the Bank of England warned lawmakers about rapid consumer credit growth.

Next week the central bank releases a half-yearly report into risks in Britain's banking system, and has said it could be time to implement new, higher capital requirements intended to take the froth off bubbly lending.

"These statistics show that housing market activity remained strong in October," BBA chief economist Richard Woolhouse said. "Consumers remain confident and their incomes are growing."

Net mortgage lending rose by 1.891 billion pounds in October, down from an increase of 2.191 billion pounds in September, but Woolhouse said gross lending -- which excludes repayments -- had risen at its fastest rate in seven years.

"Bank lending to companies is polarised," he added. "There is growth in lending to wholesale, retail and manufacturing sectors, while lending to the construction and real estate sectors is continuing to contract," he said.

The BBA data are generally a good guide to trends in more comprehensive Bank of England lending data, which is due on Nov. 30, but do not include lending by mutually owned building societies, which accounts for around third of mortgages.

British house prices have started to rise more strongly in recent months, after slowing towards the end of 2014, as the supply of new housing remains limited.

(Reporting by David Milliken and Andy Bruce)