Mortgage approvals hit new lows in July

This represents a 5.7 per cent decrease on the June, when mortgage approvals totalled 35,000, and a 40 per cent drop on the six-month average of 55,000 approvals.

The figures from the Bank of England (BoE) also showed that total net lending to individuals in July was £4.3bn - above the increase in June’s levels of £4bn.

The number of remortgages also fell in July dropping to 69,000, down from 80,000 in June.

Adrian Coles, director-general of the Building Societies Association (BSA), said: "Activity in the housing market continues to be depressed, and the approvals figures suggest this is likely to continue for some time.

"Recent falls in house prices have been widely publicised, reducing potential buyers' confidence and keeping them out of the market.

"And with societies seeking to maintain high quality loan books, societies have chosen to follow a policy of conservative lending that has further reduced the amount of mortgage business they have undertaken."

Continued economic uncertainty also saw building societies attract net receipts of £1.4bn in July, as savers sought safe homes for their money. This compares with £723m in July 2007.

Building society gross lending amounted to £3.3bn in July this year, compared to £4.4bn in July 2007.

According to Hometrack, house prices also fell for the eleventh month in a row in August, dropping another 0.9 per cent bringing house price falls to over 10 per cent this year.