Mortgage lending across the UK fell again during October after the market saw a slight rebound in September, figures showed today.

Mortgage lending across the UK fell again during October after the market saw a slight rebound in September, figures showed today.

Net mortgage lending, which strips out redemptions and repayments, was £2.9 billion during the month, down from £3.5 billion in September, according to the British Bankers' Association.

The figure was well down on the £4.73 billion which was advanced during October 2007, and was also the second lowest sum recorded since April 2001.

The number of mortgages approved for house purchase also fell to 21,584, after rebounding slightly from August's record low during September.

The figures come after a Treasury document made public yesterday revealed that new net mortgage lending is likely to fall below zero in 2009.

A report into mortgage financing by former HBOS boss Sir James Crosby suggested repayments and redemptions would outstrip lending during the year.

Sir James said 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," he said.

Figures have already shown that in August this year repayments outstripped lending - the first time they had done so since the early 1990s.

Melanie Bien, director of mortgage broker Savills Private Finance, said she was not surprised by Sir James's prediction.

She added: "It is inevitable but it will be a temporary situation.

"It is the pain we have to go through to reach the bottom before starting to come back up again."

On a brighter note, the BBA figures also showed that total mortgage advances rose by 3% during October to £11.9 billion, although this was still 38.2% lower than during the same month last year.

There was also a slight increase in the number of loans approved for people remortgaging, with this rising to 52,425 compared with 51,707 in September.

Mortgages approved for people withdrawing equity or taking out buy-to-let loans remains subdued at 23,645, 5% fewer than during the previous month.

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 during October."

But he said Government support for the banking industry, combined with lower interest rates, would feed through to lending, while measures announced in yesterday's Pre-Budget Report would help consumer demand.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "Housing market activity remains exceptionally low compared to long-term norms.

"Ongoing tight credit conditions, still relatively stretched housing affordability on a number of measures, recession, faster rising unemployment and widespread expectations that house prices are likely to fall a lot further form a powerful set of negative factors weighing down on the housing market."

People spent £7.1 billion on their credit cards during October, the same as in September, but repayments continued to outstrip spending at £7.3 billion, according to the BBA.

As a result, once interest and charges were taken into account, outstanding credit card debt rose by £248 million.

But borrowing through overdrafts fell slightly, while demand for personal loans remained weak at £1.9 billion, 26% less than a year earlier.

The amount people had saved also remained flat during the month.