Bank lending to home buyers and property investors plummeted to the lowest level in a decade over the past year.

Despite bragging 19 mortgages worth £2 million are agreed every 10 minutes, the true effect of the recession shows lenders have almost put the shutters up since the recession.

Net mortgage lending fell by about a third to £36.3 billion, compared with £59.4 billion the year before and almost £80 billion in 2006, according to the British Bankers’ Association.

Loans by buy-to-let and sub-prime lenders and other specialists shrunk by a net £48 billion in the last two years after helping fuel the property boom that contributed to the financial crisis, claimed the BBA.

Despite headline interest rates and mortgage deals for first time buyers and other borrowers, the fact is most people cannot find a mortgage to buy or refinance a home or investment property.

And in recent days, the banks have warned the situation could become worse if the Government does not step in to make money available for the banks to lend.

The underlying problem is non-deposit takers – who are mainly buy to let, sub prime and pother specialist lenders – raise their cash on the markets and lend on to customers.

But money markets are wary of lending to firms that are not taking in savings or deposits.

The data showed the impact of recession on borrowers reflected in 46,000 properties repossessed during the year, the highest number since 1995.