Gross mortgage lending of £8.0bn in September was 10.8% lower than a year ago, and the average value of house purchase approvals at £142,900, saw another monthly fall but was still some 4.1% higher than a year ago.

The remortgaging figures have improved slightly in the last three months while those for equity withdrawal have fallen back slightly.

The BoE said subdued spending continues to lead to reduced consumer demand for unsecured credit – particularly on personal loans – which has contracted by 1.6% over the past year. Personal deposits have risen 4.6% over the past year.

Net mortgage lending increased by £1.6bn in September compared to £2.9bn in the same month in 2009 as credit repayments continued to hold up at fairly strong levels.

BBA statistics director, David Dooks said:

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“Subdued mortgage activity and little demand for unsecured credit are a reflection of household uncertainties ahead of the Spending Review. Demand for new mortgages remains low despite more properties on the market and falling house prices.”

Jonathan Samuels, CEO of specialist lender, Drawbridge Finance said the latest figures from the BBA are a reflection of just how cautious consumers have become.

“Despite falling house prices and some very competitive mortgage products, creating almost ideal buying conditions, borrowers overall are continuing to sit on their hands.

“The mortgage market is likely to stay in this limbo until the Spring of 2011 at the earliest, with house purchase approvals consistently low.”