The government is hoping to stimulate the mortgage market
The number and value of home loans are at their lowest levels since current records began, according to the Council of Mortgage Lenders (CML).
The number of loans granted for house purchases in August fell to 42,000 - some 59% lower than the same month a year ago.
The value of these loans was £6bn, which was 63% down on August 2007.
Government measures to help the mortgage market will take time to feed through, the lenders' group says.
Both the number and value of house purchase loans in August were at their lowest since monthly records began in January 2002.
The more historic quarterly data shows that the number of loans were at their lowest level in the last three months since the third quarter of 1974.
The number of first-time buyers stepping onto the property ladder has plunged, the CML said.
They faced having to borrow less because of falling house prices, but needed to put down more as a deposit in advance owing to increasingly tight lending criteria by mortgage providers.
The typical deposit put down by first-time buyers in August stood at 16% of the value of a property - the highest proportion since 1980.
The average first-time buyer borrowed 3.18 times their income, down from 3.39 in August last year. They typically borrowed £106,754.
Those moving home were also being squeezed on borrowing in August. The CML said there were 26,600 loans to home movers, valued at £4.1bn.
This was 61% down in volume and 64% down in value compared with the same month a year ago.
There was a slight shift in the proportion of borrowers choosing tracker rates, which rose slightly, while the level of those opting for fixed rate deals in August fell slightly compared with the previous month.
House price changes are different across the UK, figures show
"Fixed rates were higher than tracker rates and rose by more from July to August. Expectations of base rate reductions have also increased, so it is unsurprising to see consumers moving in favour of variable rates," said CML director general Michael Coogan.
On Monday, the government announced it was injecting £37bn investment into Royal Bank of Scotland (RBS), Lloyds TSB and HBOS.
In return it suggested that the three banks return mortgage and small-business lending to 2007 levels.
"The package of measures announced yesterday will have a positive effect, but it will take time for it to feed through to the mortgage market," said Mr Coogan.
The value of the average home in the UK was 3.4% lower in August than a year ago, the government's own figures revealed on Tuesday.
This was down from a 0.3% drop in annual house prices recorded by the Department for Communities and Local Government (DCLG) in July.
The new figures put the cost of the average UK home at £211,410.
The annual fall for the price first time buyers paid was 4.5% down in August, the figures show.
Prices fell year-on-year in England by 3.4%, were down 4.3% in Wales and dropped 18.6% in Northern Ireland. But in Scotland house prices were 1.3% higher than a year ago, the DCLG said.
Falling prices were led by flats, which dropped in price by 5.1% between July and August, followed by terraced houses (down 3%), bungalows (down 2.2%), semi-detached houses (down 1.8%) and detached houses (down 1.6%).