Secured loan approvals by banks in April declined by 37% year on year, data from the British Bankers Association has revealed.

The BBA attributed the decline to lower levels of available equity and a reluctance amongst homeowners to take on extra borrowing.

Unsecured loans and overdrafts continue to be weak. However in March overdrafts were reduced due to timing issues ahead of Easter and when this was reversed in April lending was boosted to produce the first positive lending figure for 18 months.

Net repayment of borrowing by non-financial companies continued in April, particularly from large businesses.

Overall borrowing levels by businesses reported a massive decline of £2bn as firms contain their finance requirements until more certain trading conditions and investment prospects emerge.

Duncan Kreeger, director at peer-to-peer lender West One Loans, said: “In a disappointing set of figures one story stands out from the crowd – the serious deterioration in business lending.

“Two billion pounds is a huge chunk of funds to be removed from the net balance sheets of the UK’s businesses.

“This continuously poor performance is one of the reasons why alternative business finance is booming – it is now lending over £1m each day – and growing at a rate well into the double digits.

“Some members of the BBA are trying to lend more. But sadly the results speak for themselves.”