Around 22,448 new loans for people moving home were approved during the month, 65 per cent fewer than in July 2007 but broadly unchanged from the previous month.

Net mortgage lending, which strips out redemptions and repayments, also levelled out at £4.3bn, also unchanged since June, the British Bankers' Association said.

David Dooks, BBA statistics director, said: "The monthly numbers of approvals for house purchase, which have fallen by some two-thirds over the last year, levelled off in July. It would, however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low."

The value of mortgages approved for house purchase hit a 10-year low during the month, at just £3.2bn, 69 per cent below July 2007's figure, the BBA said. The total value of all mortgages approved also dropped by seven per cent during the month to £11.8bn, 44 per cent lower than 12 months ago, and well down on the recent six-month average of £16bn.

Trend

People remortgaging continued to account for more than half of all loan approvals during July, but there was a seven per cent month-on-month fall in the number of loans approved, while the number of buy-to-let and equity release mortgages in the pipeline increased slightly.

The BBA figures showed that unsecured lending remained subdued during July with credit card spending hitting a 13-month low of £7.1bn. Consumers continued the current trend of repaying more than they spent, reducing their debt by £7.4bn during the month, although this was also the lowest for more than a year.

Borrowing through loans and overdrafts rose by £74m during the month, in line with the recent trend. But people collectively saved only £800m during July, well down on the average during the previous six months of £2.8bn.