Bank of England lending figures show that mortgage approvals fell in October to 88,000, the lowest level since February 2005 and down from 100,000 in September. Financial Times, Independent

Hidden within the sharp overall reduction in October’s mortgage approvals is a divide between building societies, who are still issuing mortgages, and banks and specialist lenders who have slashed the number of mortgages approved in October compared with early summer.

The data bolstered the views of Jackie Bennet, head of policy at the Council of Mortgage Lenders, who told a City audience on Tuesday that lenders were struggling to fund mortgages because wholesale markets had seized up and the level of retail deposits was too low.

Building societies get almost all their funding from retail deposits and saw record amounts of savers’ cash flowing in the past month - much of it coming from frightened former Northern Rock customers looking for a new home for their money. For those institutions, finance has not been an issue. They approved 20,000 mortgages in October, slightly up on July. The quantity of their lending, net of mortgage redemptions, was also higher than in July.