In its monthly statistical release the BBA says mortgage lending hit £2.9bn in October, down from September’s £3.5bn.
Total mortgage loans approved stayed at £11.2bn, while the number of approvals for house purchase dropped from £3.1bn in September to £2.8bn this month.
Remortgaging figures increased from 51,707 in September to 52,425 in October, while house purchase dropped 1,799 from 23,383 last month to 21,584 in October.
BBA statistics director David Dooks says: “Comparison of current lending levels with last year is obscured by the very different economic conditions that exist now, reflecting a much reduced appetite for borrowing. Mortgage approvals remained low, consumer credit was subdued and people used their deposits to fund spending in October.”
According to Dooks high street banks provided almost £12bn, or two-thirds of all new mortgages, in October. They also increased lending to non-financial companies by £1.4bn.
Dooks now hopes yesterday’s pre-Budget report, combined with the support from high street banks, will stimulate “consumer demand”.
Royal Institution of Chartered Surveyors senior economist Oliver Gilmartin says the news comes as “little surprise”.
He says: “These conditions highlight the difficulties facing first time buyers, particularly where stringent deposit requirements continue to be a major barrier to those wishing to enter the market. Aggressive interest rate cuts by the Bank of England in recent months and the prospect of more to come before Christmas will take time to filter through into increased house sales.”