Mortgage lending plummeted by 95% during August, reaching a record low, latest figures have revealed.

Net lending fell to just £143 million during the month, a fraction of July's sum of just under £3 billion, the Bank of England said.

The figure strips out repayments and people switching their home loan to a different lender. It is the lowest level recorded since the Bank began collecting statistics in this way in 1993.

The slump shows no sign of slowing down, with the number of mortgages approved for house purchases sliding to a record low of 32,000 during August, although this was slightly ahead of economists' expectations.

The steep drop off in net lending added to the total amount of outstanding mortgage debt falling for the first time ever in the current statistical series, dropping from nearly £1.217 trillion at the end of July to £1.216 trillion at the end of August.

The Building Societies Association also announced reduced lending during August, with net lending for the sector of minus £38 million - meaning that customers repaid £38 million more than they borrowed.

It is the third consecutive month that net lending by building societies has been negative.

Howard Archer, chief UK and European economist at Global Insight, said: "The dire Bank of England mortgage data shows that housing market activity is being decimated by the highly damaging combination of stretched buyer affordability and tight lending practices."

The Bank of England failed to offer an explanation as to why net lending had fallen so steeply, but it is likely to be due to a combination of the current problems in the mortgage and housing markets, as well as a jump in mortgage repayments relative to new lending.

It has also been suggested that people delaying buying a house as they waited on the Government's announcement on stamp duty could also have contributed to the collapse.

The Government announced at the beginning of September that it would scrap stamp duty for one year on properties worth up to £175,000.

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