The number of mortgages approved for house purchase fell to a 16-month low in August, according to the British Bankers’ Association (BBA).

There were 31,767 mortgage approved last month, down from 34,219 in July.

Gross mortgage lending was also down to £8.1 billion from £8.4 billion in July and 7.6% lower than 12 months ago.

The annual growth in the banks’ net mortgage lending was 4.1%, up on the 1.0% for the whole mortgage market in July.

David Dooks for the BBA said: “The on-going contraction in net lending to business masks the reality of finance available. Bank of England research shows that there is around £25 billion of new lending to business quarter on quarter