Fresh gloom descended on the housing market today as it emerged that fewer than 22,500 mortgages were approved last month, a 65 per cent decline on last year and only fractionally above record lows for June.

According to figures released by the British Bankers' Association, just 22,448 mortgage loans were approved in July. This is only slightly ahead of June's low of 22,369 and compares with an average monthly rate over the previous six months of 34,104.

It is thought that the annual, near two-thirds slide in approvals is among the biggest ever recorded by the BBA, which acts as the mouthpiece for the bank lending industry.

The figures, which also show an 11.9 per cent slide in the average loan value to £138,000, suggest that there is little relief in sight for embattled British homeowners.

House prices have fallen by as much as 10 per cent in the past 12 months, according to some estimates, as high street banks have tightened their loan criteria, making it harder for homebuyers to borrow.

According to the Halifax, among the UK's biggest mortgage lenders, house prices fell by 1.7 per cent in July and have fallen 8.8 per cent over the past 12 months.

Total net mortgage lending, seasonally adjusted, remained flat at £4.3 billion in July, according to the BBA, below the six-month average of £4.8 billion.

David Brooks, the BBA's statistics director, said: "The monthly numbers of approvals for house purchase ... 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."

Mr Brooks added that the slide in approvals also showed that consumers were acting prudently in the light of pressures on household budgets.

The BBA also published figures today that showed that spending on credit cards had fallen by £200 million during July to £7.1 billion for the month as a whole. The most recent monthly spending total compares with an average of £7.4 billion over the previous six months.

It came as uSwitch.com, the price comparison website, claimed that gross mortgage lending has fallen by £10 billion over the past year - at an average quarterly rate of £2.5 billion.

Unsecured lending, including on credit cards, has fallen by £1.1 billion over the same period, according to uSwitch, which said the drop corresponded to more than 157,000 individual loans.

USwitch published research today which it claimed showed that consumers who were being denied convential bank loans were running up their credit card bills instead.

It said credit card debt, which stands at £54.9 billion, would surge to £158 billion if card-holders borrowed up to their limit.

Simeon Linstead, head of personal finance at uSwitch, said: "In just 12 months, this economic landslide has sent the consumer lending market into disarray.

"For those with perfect credit records, it's unlikely this will be an issue, but for others it could be problematic."

Last week, the Council of Mortgage Lenders, which also tracks the market for housebuyers but canvasses building societies and other lenders as well as banks, said that gross mortgage lending totalled about £24.8 billion in July.

This was 5 per cent ahead of the previous month, but down more than a quarter compared with last year.

Money Central: the latest London house prices, borough by borough

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