The value of new mortgage lending plummeted in August, figures showed today, as falling confidence in the housing market and the squeeze on credit continued to take their toll.

The Bank of England said net mortgage lending - the value of loans advanced during the month once repayments and redemptions are taken into account - plummeted to just £143m during the month.

This is less than 5% of the £3bn of net lending in July and the lowest level since records began in April 1993.

The figure reflects several months of falling approvals for loans for house purchases and remortgages, with recent months showing a steady decline in the number of new deals agreed.

There are no signs of lending levels recovering, with the figures showing the number of mortgages approved for house purchases falling to a record low in August.

The Bank said 32,000 mortgages for purchases had been approved over the month, down from July's record low of 33,000 and well below the previous six-month average of 49,000.

These approvals were worth a total of £4.1bn, down from £4.3bn in July and below the £6.8bn averaged in the previous six months.

Remortgage numbers also fell, with 64,000 loans worth £8.7bn approved during the month, compared with an average of 88,000 in the previous six months.

The value of all types of mortgage approved in August was only £13.6bn, less than half of the figure for August last year of £30.2bn and the lowest for nearly seven years.

August's figures for home purchase approvals are likely to have been hit by speculation over changes to stamp duty rules, which were only confirmed at the start of this month.

During the summer, estate agents and surveyors said they believed buyers were delaying entering the market until the government confirmed if there would be any changes to the rules.

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

"Widespread expectations that house prices will continue to fall markedly for some considerable time to come is also significantly limiting housing market activity, as is heightened concern over the economic outlook and job prospects."

The recent turmoil in the financial market, which resulted in the takeover of Halifax's owner HBOS and today's nationalisation of Bradford & Bingley has pushed up mortgage rates in recent days, making life even harder for buyers.

Last week, HSBC and Woolwich increased rates on some of their deals, and today Lloyds TSB announced it was raising rates on two- and three-year fixed-rate mortgages by up to 0.26%.

Separate figures from the Building Societies Association showed the value of mortgages approved by its lenders fell by 31% in the 12 months to August to £2.8bn.

For the third month running net lending by societies was in negative figures, at -£38m. In August 2007 net lending was worth £771m.

Money continues to come into building society savings accounts, although deposits halved over the month from £1.4bn in July to £771m in August.