The number of mortgages approved fell to 26,097 last month from 28,024 in February, and were 25.3% lower than the same month last year.
It says all measures of mortgage lending were slightly weaker in March than in February, with the £8.9bn of gross mortgage lending at its lowest level since April 2001. This was also down 47% on March 2008.
While the value of house purchase loans approved fell from £3.5bn to £3.3bn and the total value of mortgages approved fell to £7.3bn from £7.7bn.
David Dooks, statistics director at the BBA, says it is unrealistic to expect the mortgage market to recover in a steady and consistent way in the current economic environment.
He says: “Lending to households continues to grow, as banks make funds available for people who meet their lending criteria but consumer confidence is fragile and unlikely to change demand markedly in the near-term.
“Company demand for increased bank finance is subdued, as large corporates seek alternative funding sources and small businesses operate out of cash-flow during this recession.”
Nicholas Leeming, director of propertyfinder.com, says confidence in the housing market is improving, but restrictions on mortgage supply are still making it extremely difficult for first-timers to get on the ladder.
He says: “This stymies the whole market, making chains much more difficult to complete. Transactions cannot fully recover until those entering the market for the first time can get the finance to do so. An extension to the stamp duty holiday benefits no-one if the lenders won’t provide the mortgages.”