The number of new mortgages has fallen to its lowest level since the current system of recording data began in 1999, figures from the Bank of England show.

The amount of loans approved in June slipped to 36,000 from 41,000 in May, with the increase in total mortgage lending lower than expected at £3.1bn.

The impact of the economic downturn has meant many people are unable to get loans without sizeable deposits while the chaos caused by the sub-prime lending fiasco - which started the credit crunch - means banks are also unwilling to lend to each other.

Some providers have reduced interest rates slightly in recent weeks but with inflation still high the Bank of England is unlikely to help homeowners out with a cut in interest rates any time soon.