According to Bank of England figures, lenders approved 51,653 house purchase loans in February 2013, compared to 54,187 in the first month of the year. In total, approvals for lending secured on dwellings fell by 2.5%.

However, remortgage lending increased by 3.8% to 26,771.

Figures from the British Bankers’ Association also suggested a February fall in lending when they were published last month.

Mortgage Simplicity director Chris Love said: “This latest data from the Bank of England underlines just how dysfunctional the mortgage market still is.

“The sharp fall in loan approvals for house purchase during February is a stark reminder of how the mortgage and property markets remain volatile, constrained by both strict lender criteria and low consumer confidence.

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“You can’t do anything about weak demand but there is certainly room for improvement in lender criteria, which in many cases remain excessively harsh.”

LMS chief executive Andy Knee said: “The latest Bank of England lending statistics shows that although the number of approvals over the past month has remained reasonably constant, there has been a shift in emphasis within the market.

“The number of approvals for house purchase has fallen considerably, whilst the number of approvals for remortgaging has seen an increase. This rise is most likely due to the significant number of excellent value deals for those with low LTVs that are currently available for remortgagors.

“Although this is good news for the remortgage market, these figures underline the need for the government’s Help to Buy scheme, which is due to be introduced later this week.”