The number of mortgages approved last month has declined by 65 per cent on last year according to figures released by the British Bankers’ Association (BBA).

Only 22,448 mortgage loans were approved in July, only slightly ahead of June’s record low of 22,369, compared to an average for the past six months of 34,104.

The study also shows that the average loan value has decreased to £138,000, down by 11.9 per cent.

BBA also suggested that total net mortgage lending, seasonally adjusted, remained flat at £4.3 billion for July, below the six-month average of £4.8 billion.

The BBA also published figures illustrating that credit card spending had fallen by £200 million during July to £7.1 billion for the month as a whole.

David Brooks, the BBA’s statistics director, said: “The monthly numbers of approvals for house purchases, 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.”

Chiltern’s Nathan Gladwell says: “The decline in the number of mortgage approvals shows that consumer’s household budgets are still under pressure, and they are realistically unable to afford to move home or get on the housing ladder.

“People appear to be taking a ‘patient’ approach to borrowing and are likely to stay on their lender’s standard variable rate for the near future.

“This could spell disaster for many households though, as their monthly expenditure could be massively reduced by finding a more competitive rate. This would prevent many from falling behind with their other debt payments.”