The pounds 729m of net advances last month compared with pounds 1.27bn in June. The figure was 37 per cent down on the same period last year.
Building societies' dismal lending results came as Britain's banks released figures yesterday showing they lent a total of pounds 367m to mortgage borrowers last month, itself the lowest amount since September 1992.
Adrian Coles, director general of the Council of Mortgage Lenders, said: "The low levels of activity reported by estate agents, along with continued house price falls, underline the enduring malaise in the housing market.
"A commitment to homeowners from the Government would help to restore some of the confidence required for a recovery in the market."
Building Societies' provisional loan commitment numbers, stood at 43,000 in July, down from 54,000 in the same month last year.
Although this total is sometimes revised upwards, the final June figures, also released yesterday, showed a 20 per cent drop, down to 50,000 from the 60,000 recorded in the same month last year.
The BSA's figures indicate that the vast majority of loans made in July continued to be for remortgages, as lenders competed with each other to "churn" borrowers. Gross mortgage lending, at pounds 3.2bn in July, was more than four times the figure for new home loans.
Michael Saunders, an economist at Salomon Brothers, predicted further gloom for the market. Figures he obtained from the Central Statistical Office showed that the overall number of housing transactions for July, at about 95,000, was more than 10 per cent lower than at the same point last year. Mr Saunders said transactions had fallen to the "recession levels" last recorded in 1993.
"Housing turnover tends to lead trends in house prices and the weakness in turnover, coupled with soft figures for lending and mortgage commitments suggests that house prices will remain under pressure in coming months," Mr Saunders said.
"I am not saying that house prices will fall every single month but the general movement will continue to be downwards for some time to come."
A CML spokeswoman said mortgage lenders still hoped to persuade the Government to help revive the housing market: "Our impression is that when we talk to members of the Number 10 policy unit, we get a good response but that the Treasury are much more laissez-faire."
While lending remained weak, building societies continue to record large inflows of funds. July, with a total of pounds 956m, was the 13th month in a row to show a net increase, even though there is usually a large outflow to pay for holidays at that time.
The BSA denied that one reason for the large increase had been the huge numbers of speculative accounts being opened last month to take advantage of potential de-mutualisations.Reuse content