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The number of mortgages approved for house purchases rose slightly during September but was still 57% lower than a year ago, the British Bankers' Association (BBA) said today.
Seasonally adjusted figures show 23,422 loans were approved for house purchases during the month, compared with 53,694 in the same period last year.
The 10% increase between August and September brings the figures back from a record low of 21,342. The number of loans approved for remortgage customers also rose slightly from 47,260 in August to 51,523 last month.
Net mortgage lending, which strips out redemptions and repayments, rose to £3.6bn in September from just £2.1bn in August, the lowest figure since February 2001.
However, it was still below the previous six-month average of £4.1bn and well down on last September's figure of £6.4bn.
The BBA said it was no surprise that lending levels remained low in September, despite the government's moves to kick-start the housing market by raising the stamp duty threshold to £175,000.
David Dooks, the BBA's statistics director, said: "Compared to a year ago, the mortgage environment has changed significantly, with supply restricted as a consequence of the situation in financial markets and demand at a much reduced level."
He added: "In a mortgage market that is becoming more concentrated, the high-street banks now provide more than two-thirds of all new lending."
The figures cover the month before the government made moves to shore up the British financial system by cutting interest rates and part-nationalising some of the country's biggest banks.
Although existing borrowers on tracker mortgages will soon feel the benefit of the rate cut, as lenders pass it on in next month's payments, new borrowers are continuing to be squeezed.
In the past two weeks lenders have increased margins on tracker deals and have continued to cut down on maximum loan sizes.
Some lenders have pulled deals and not replaced them as the wait for interbank borrowing rates to fall.
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