With the continued uncertainty in the housing market, the total net value of approvals made by building societies has fallen to £2.8 billion in the month of August or by 31 per cent, in comparison to figures from August last year.

Andrew Gall, business economist at the BSA, said: “Activity in the housing market remains depressed, so, although the figures for both net approvals and net lending are better than for last month, they still remain low.

“With the Land Registry data showing a 4.6% annual drop in property prices, and with the BSA’s own Property Tracker survey showing that more than half of people consider the prospect of future falls in house prices a barrier to house purchase, it is hardly surprising that demand for mortgages is so low.”

Michael Coogan, Director General of the Council of Mortgage Lenders (CML), also commented on the drop in the value of mortgage lending, he said: “Gross mortgage lending, but more particularly net mortgage lending, fell sharply in August. It is quite possible that we could see an overall shrinkage in the size of the mortgage market in the short term.