The major British banking groups saw gross mortgage lending fall by £680m to £5,072m in August.
Seasonally adjusted net lending fell by £242m to £851m. There were 84,289 new loans approved for purchase or remortgaging.
British Bankers' Association director general Tim Sweeney says: "The major banks' loan approvals returned to more normal levels in August after the record figures seen the previous couple of months. The slowing economy and job uncertainty are suppressing demand."
The figures exclude building societies.