The BSA has revealed gross lending in July was £3.3bn compared to £4.4bn in July 2007. Approvals also dropped to £2.5bn from £3.9bn in July 2007.
Net lending by mutuals also fell in July from £506m in 2007 to a negative balance of £79m in 2008 – meaning that more money was deposited than was loaned out for the second month in a row.
Adrian Coles, director general of the BSA, says: “Activity in the housing market continues to be depressed, and the approvals figures suggest this is likely to continue for some time.”
Coles says recent falls in house prices have been widely publicised, reducing potential buyers’ confidence and keeping them out of the market.
He adds: “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.”