A 97 percent year on year drop was also registered by the "dire" new Bank of England figures.
Mortgage lending plunged by 95 percent last month, the Bank of England revealed this morning.
Around £143 million was advanced by mortgage firms across the 31-day period - a very low total despite August traditionally being the quietest month of the year for the sector.
The shocking fall means that the equivalent of just £1 for every £20 lent in July was lent in August. The new figures also reveal a 97 percent drop, year on year - signifying that the market has almost dried up due to the pressures of the credit crunch.
One of the primary features of the crunch is the tightening of criteria for borrowers by mortgage lenders, who are becoming increasingly wary of lending to "risky" customers. Moreover, there has been a collapse in demand for buying property, due to the ten percent drop in house prices which has occurred over the last year.
"The dire Bank of England mortgage data shows that housing market activity is being decimated by the highly damaging combination of stretched buyer affordability and tight lending practices," Howard Archer at Global Insight told the BBC.
August's exceptionally low total also means that the UK's total mortgage debt has fallen for the first time since the Bank's records began in 1993 - going from £1.217 trillion to £1.216 trillion across the month.
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