The high street banks’ annual growth in net mortgage lending was 3.5% in October, a substantial increase on the 0.8% reported in September for the whole of the mortgage market, but gross mortgage lending for October was just £7.6bn, the lowest since February 2001.

House purchase approvals were at 30,766 in October, reflecting the weak activity in the mortgage market, with the average value of house purchase approvals 2% up on a year ago at £144,900.

Meanwhile, the number of remortgaging approvals was stronger than the recent six-month average of 22,573 at 24,112, while equity withdrawal remained weak.

David Dooks, statistics director at the BBA, said: “Activity in the mortgage and consumer credit markets continued to be subdued in October, reflecting uncertain prospects for households and lower consumer confidence.

“Credit availability for viable businesses has improved, so a continued contraction in net lending growth reflects repayment behaviour, particularly by larger companies.”

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Richard Sexton, business development director at e.surv – provider of residential valuation services, said “Beneath the surface there is a real two-speed market in operation. Approvals are actually up for the most expensive properties. Wealthy buyers are using large deposits to side-step lending restrictions and they are more likely to be in parts of the country, like prime London, which have been more insulated from wider market weakness.

“The flip side is that approvals for cheaper properties have fallen dramatically. It’s hard to foresee a significant improvement in mortgage lending.”