This compares to a corresponding 10% fall to September 2014.
Approvals for remortgaging in October were even more subdued, standing 21% below the same month last year.
Gross mortgage borrowing totalled £10.5bn in October (2% higher than the same month last year) against £10.6bn in September 2014.
Richard Woolhouse, BBA chief economist, said: “Today’s figures suggest that the cooling of the property market has continued in recent weeks.”
But Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Before jumping to conclusions about the annual drop in mortgage approvals, it’s important to recognise that October 2013 saw activity gathering steam at a pace that was prompting concern from some observers.
“Both the Funding for Lending Scheme and Help to Buy were active in the mortgage market at that point and there is no denying that the removal of FLS and the arrival of the Mortgage Market Review have had a calming effect.
“However, there is also no getting away from the fact that the seasonally adjusted total for loan approvals in October is the lowest of 2014 and the lowest since March 2013 – the final month before the Help to Buy equity loan scheme got underway.”
He added: “The drop in loan approvals from the biggest banking groups could also suggest that customers are increasingly looking beyond the high street to find a loan under the new regime.
“An unprecedented number of products were available during October and the rise in applications made via brokers may indicate that customers are shying away from the traditional visit to their bank manager and opting to seek broker advice on products from a broader range of lenders.”
On a non-seasonally adjusted basis October’s gross mortgage borrowing was still £525m higher month-on-month, while there were 4,461 more transactions in October compared to the month before.
Richard Sexton, director of e.surv chartered surveyors, said: “The introduction of further regulation in the form of loan to income caps in early October has taken some of the wind out of first-time buyers’ sails.
“The increasingly rigorous testing may have seemed daunting to prospective homeowners – a negative image has likely had a dampening effect on the real positive influence of MMR and Help-to-Buy.
“In addition, those who have seen regulation for the vital tool it is have started to buy up the existing stock of starter homes.
“It is not enough merely to tinker with the financial conditions of first-time buyers and those that lend to them with schemes like MMR or Help to Buy – especially if these necessary checks and balances are misconstrued by the very people they are meant to assist.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, saw the general election as an important factor.
He said: “The uncertainty surrounding the election could mean the market continues to stagnate in the early part of next year, particularly in the £2m-£3m bracket where fears of the introduction of a mansion tax are causing would-be buyers to sit on their hands.
“However, once the election outcome is known, we expect the housing market to be buzzing as all the pent-up demand from the start of the year is released.
“We expect the year overall to be a strong one, with around £215bn of lending as demand to borrow and an appetite to lend remain strong.
He added: “The regulator must urgently address the issue of older borrowers, many of whom are now struggling to get a mortgage.
“It is difficult to fathom why a lender would rather advance 95% loan to value to a first-time buyer with no track record than 50% to an older borrower with a 40-year unblemished track record.”