David Dooks, BBA statistics director, said the rise in deposits was due to increased saving by concerned consumers.
He said: “Low consumer confidence is depressing demand for new borrowing and consumers are continuing to save.”
BBA statistics also revealed that the volumes of mortgage approvals for house purchase and remortgaging continued to increase slightly, while the average house purchase approval rose to £155,900.
Mr Dooks said the government’s various schemes to assist the mortgage lending market will help more first-time buyers and mortgage chains. He added: “With various government schemes, including the recent extension to Funding for Lending, banks are offering competitive rates and products.”
Lea Karasavvas, managing director of London-based Prolific Mortgage Finance, said: “Mortgage approvals for house purchase may be slightly down on the six-month average but there is without doubt more momentum in the market. Lenders are having to price much more aggressively these days to stay competitive and the resultant rates are leading many people to finally make their move and buy.”