The number of mortgages approved for people buying a home has fallen by 46% during the past year as the credit crunch continues to impact on the market, figures showed yesterday.

Mortgage approvals for house purchase slumped to 35,417 in March, the lowest level since the British Bankers' Association first began collecting statistics in 1997.

Across the board, just 129,300 mortgages for all purposes were approved during the month, the lowest level since September 2000, as the market continued to be constrained by lenders' higher rates and tighter lending criteria.

Mortgage advances were also subdued, with a total of £16.bn advanced during March, £1bn less than in February and 14.7% less than in the same month of 2007.

The Bank of England offered help to banks earlier this week when it unveiled a £50bn scheme to help tackle the problems caused by the credit crunch, under which lenders can swap their riskier mortgage-backed assets for safer government bonds.

Lenders welcomed the announcement as an important step to tackling the current funding difficulties they faced, but warned that it was unlikely to lead to a reduction in mortgage rates for new borrowers in the foreseeable future.

The credit crunch has led to steep increases in mortgage rates, with the cost of two-year fixed-rate deals for people with a 5% deposit recently hitting a seven-and-a-half-year high, despite falling interest rates.

Lenders are raising their rates to reflect their own higher borrowing costs, and are demanding ever higher deposits from borrowers, making it increasingly difficult for many people to get on to and trade up the housing ladder.

Shadow Chief Secretary to the Treasury Philip Hammond said: "The Bank of England has done its bit to try to ease the funding crisis - now it's the government's turn to take action to restore confidence in the housing market."