The downward trend spiral continued in September, the British Bankers' Association (BBA) said.
The number of mortgages approved for house purchases fell slightly compared with the previous month to 31,104, as low demand for new loans continued.
This was below the average of the previous six months, the BBA said.
The average value of these approved loans was £142,900, which was some £5,100 lower than the average of the previous six months but 4.1% higher than a year ago.
BBA statistics director David Dooks said: "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."