House purchase approvals continued to weaken in September reflecting low demand, according to Bank of England figures.
Gross mortgage lending of £8bn in September was 10.8% lower than a year ago.
There was another monthly fall in the average value of house purchase approvals to £142,900 but the level is still 4.1% up on a year ago.
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.
Remortgaging figures have also 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. Meanwhile, personal deposits have risen 4.6% over the past year.
BBA statistics director, David Dooks says: "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."
On the commercial side, business borrowing continued to reflect weak demand combined with companies reducing gearing by repaying bank borrowing.
The survey suggests credit availability improved for medium and smaller businesses in Q3, though demand weakened.
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