The number of loans approved for house purchases fell to a new low last month.

The banks approved 21,118 mortgages for new homes in June, 23 per cent lower than in May and 67 per cent lower than in June last year, figures from the British Bankers' Association (BBA) show. That is the lowest figure recorded since the BBA's series began in 1997.

The lack of mortgages available to new buyers in the wake of the credit crunch has caused a seizure in the housing market and prompted prices to fall as sellers cut their asking prices to try to secure a sale.

Experts say that new buyers are being further deterred from climbing on to the housing ladder by the falls in property prices as they wait for the market to bottom out. The average house price has fallen by more than 10 per cent since the market turned in September, figures from Halifax show.

David Dooks, statistics director at the BBA, said: “The record low number of mortgages means that the whole market is likely to be at its least active since the early 1990s.”

The dismal news for homeowners came as new figures suggested that increasing numbers of borrowers were already feeling the strain of rising utility, food and mortgage bills.

The number of repossessed properties being put up for auction in the first six months of this year rose by 64 per cent. About 3,100 repossessed properties were taken on to the books of auction houses in England, Scotland and Wales between January and June this year.

The Council of Mortgage Lenders has already given warning that repossessions would rise by 50 per cent this year to 45,000. Approvals for remortgage loans also fell slightly, to 59,637 during June, down 5 per cent from 62,637 in May, and 13 per cent lower than in June last year.

The BBA figures represent lending from British banks, which accounts for around two thirds of the UK's mortgage lending.

Analysts are forecasting that house prices could fall by up to 30 per cent by the end of next year.

Vicky Redwood, of Capital Economics, an economic consultancy, which is forecasting that prices will fall by 15 per cent this year alone, said: “The outlook for the housing market remains bleak.

"Even if the mortgage credit squeeze eases, with house price expectations deteriorating and the economy and labour market faltering, mortgage demand is likely to remain at current subdued levels for some time.”