Net lending by building societies in January this year was in negative territory at -£491m, compared to £1.4bn in January 2008.
The latest figures from the Building Societies Association show that gross mortgage lending by building societies fell dramatically from £2.4bn in December to £1.57bn in January.
Building society gross mortgage lending is also significantly down from last year’s levels, at £4.1bn at the same time last year.
Approvals in January were £347m compared to £3.2bn the previous year.
Net withdrawals for the month hit £390m, whereas in 2008 it was receipts that were dominant with building societies receiving £594m in net receipts.
Adrian Coles, director-general of the BSA, says: “With the depressed state of the housing market, it is no surprise that mortgage lending was so low in January.
“Indeed, repayments of existing loans exceeded new lending.”
Coles adds: “Potential buyers may not enter the market while it appears that house prices are likely to continue to fall.
“Lenders may also be wary about granting loans in a declining market and in the current unsettled market conditions lenders will have concerns about the long-term availability of funding.”