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Mortgage lending for house purchases fell by 52% over the 12 months to October, according to latest figures from the British Bankers' Association (BBA).
A total of 21,584 mortgages were approved by banks for house purchases during the month - down on the average for the previous six months of 25,272.
Net lending for mortgages rose by £2.9bn last month, compared with £3.5bn in September and the previous six-month average of £3.9bn.
BBA statistics director, David Dooks, said: "Comparison of current lending levels with last year is obscured by the very different economic conditions that exist now, reflecting a much reduced appetite for borrowing.
"Mortgage approvals remained low, consumer credit was subdued and people used their deposits to fund spending in October."
The figures come after a Treasury document yesterday revealed that new net mortgage lending is likely to fall below zero next year.
A report into mortgage financing by Sir James Crosby, former HBOS chief executive, suggested repayments and redemptions would outstrip lending during the year and that, in the current economic climate, it would be hard for banks to finance loans.
"Therefore I believe that new net mortgage lending is likely to fall below zero in 2009, with only a modest recovery likely in 2010," Crosby said.
Mortgage repayments outstripped lending in August this year - the first time they had done so since the early 1990s.
Melanie Bien, director of mortgage broker Savills Private Finance, said: "It is the pain we have to go through to reach the bottom before starting to come back up again."
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