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 New Mortgage loan  approvals from banks and building societies have dropped by over a third in the last year, totaling £7bn in February, according the latest figures from the BBA.

Overall mortgage lending dropped by 2.9% over the last 12 months, falling to £17.9bn in February.

Net mortgage lending  however strengthened, largly down to an increase in the banks market share as a result of strong remortgaging proposals. Net lending rose by 12% over the year.

The amount of remortgages approved by lenders rose by almost 5% year on year to 72,193 in February 2008, while the number of mortgages for house purchase fell by a third, falling to 43,000.

David Dooks, director at the BBA,said: “In an environment of tightening lending criteria, remortgaging, either to fix, re-fix, or reduce borrowing costs, has been a clear influence on mortgage data in the first two months of this year, resulting in mainstream lenders picking up market share.”