It says the number of approvals for house purchase was again very low and those for remortgaging also fell.
The BBA also reports a rise in consumer credit by £0.4bn in August, slightly above the previous six-month average of £0.3bn. Personal deposit growth continued to be weak and fell year on year by 0.7% to 4.0%.
David Dooks, statistics director of the BBA, says: “The low number of mortgage approvals in previous months predicted lower gross lending in August and, together with remortgaging, a much weaker net lending figure than of late resulted.
“Falling property prices, economic pressures on households, tighter lending criteria and anticipation of the government’s announcement on Stamp Duty all suppressed or delayed demand in August and will continue having an impact in the months ahead.”
Dooks adds: “Monthly fluctuations in consumer credit and deposits reflect the behaviour of families repaying as much as they spend on credit cards and using their current accounts for expenditure.”