The big picture is so big these days - and worrying - that the smaller picture of what is happening in the housing market is in danger of getting lost. Make no mistake, though: the changes that are happening will have profound effects for years to come. Britain’s mortgage-lenders are in a period of intense consolidation, of which Lloyds TSB’s takeover of HBOS, assuming it gets over objections north of the border, is the most dramatic consequence.

What is the smaller picture for the housing market? The British Bankers’ Association reported that mortgage approvals dropped to a new low of just 21,086 last month – not only lower than July’s weak 22,239, but down by 64% from a year earlier. Most astonishing, approvals were just 27% of their recent peak in November 2006. Something like this decline will be confirmed by the Bank of England in figures this week.

In normal circumstances, the temptation would have been to pin the fall in demand for mortgages, in part, on uncertainty over stamp duty and look forward to a slightly better figure for this month. The dramas of the past couple of weeks, however, have overshadowed the government’s mini-package of housing-market measures, which included the suspension of stamp duty on properties of up to £175,000. Activity is set to remain in the doldrums.

If Rightmove is correct, a torpor has descended on both sides. Buyers are not buying and sellers are not selling. Its latest house-price index shows a 1% drop this month and a 3.3% fall over the past year – but is more interesting for what it says about people’s response to this uncertainty.

Not many people, it seems, think this a good time to sell. New listings of properties for sale represent the lowest September figure on record. As a result, while sales remain, the number of unsold properties on agents’ books fell for the first time in seven months.

We may see more of this. Rightmove estimates that 98,000 “stale” properties on sale were put on the market in the days before it became compulsory for sellers to have an energy-performance certificate. From October 1, their owners will have to choose between paying for one or taking their properties off the market. I suspect that many will choose the latter course.

home.economics@sunday-times.co.uk

Explore Property

• Buying & Selling

• New Homes

• Overseas

• Interiors

• Investment

• Gardens

• Cool In Your Code

• Specials

• First-time buyer

Times recommends

• Second homes: credit crunch casualty or money-spinner?
• How I built my own sliding house
• Top 10 incentives for house buyers