Lenders are expecting house prices to fall further
UK mortgage lending by the major banks levelled off in July but the amount borrowed for day-to-day spending slowed, figures show.
Mortgage lending rose by £4.3bn during July - the same amount as June, said the British Bankers' Association (BBA).
But a low number of mortgage approvals overall prompted a warning about predicting a housing market recovery.
The rise in personal consumer credit rose by £0.1bn in July, down from the £0.3bn rise in June.
The figures for mortgages approved, but not yet actually lent, are considered a good indicator of near-term trends in the market.
The number of mortgages approved for house purchases rose very slightly from 22,369 in June to 22,448 in July, but this was still 65% lower than the same month a year ago.
For those remortgaging, mortgages approved fell from 58,624 in June to 54,532 in July - a 21% fall on a year ago.
The BBA's members account for about two-thirds of mortgage lending and the association's statistics director David Dooks warned about focusing too much on the monthly trend.
"It would be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low," he said.
Typically, people have been holding off getting a mortgage in recent months owing to a lack of availability of cheap deals and uncertainty in the housing market.
The average value of a home loan for house purchases was £138,000 in July. This was lower than the figures for each month during the past year, when the average value was above £150,000.
One theory for the fall - of nearly 12% in a year - was that borrowers have to find larger deposits as banks are keen to lend to "safe" borrowers during the credit crunch. Another is that borrowers are not overstretching themselves with large loans during the current squeeze.
Mr Dooks said that data from the banks showed that householders were "acting prudently".
The pressure on household finances, especially the result of food and fuel bills, meant the pattern of weaker savings seen in the past few months continued.
The annual growth in credit card borrowing also fell, with new spending down 2% on a year ago at £7.1bn. This is the lowest figure since June 2007.
The level of new personal loans, such as as borrowing from the bank to buy a car, also stabilised in July at £2.3bn, but was down nearly 17% compared with a year earlier.
Reviewing the figures, Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors, said: "Mortgage activity appears to be stabilising although the paltry level of activity is not supportive of a near-term pick up in house prices.
"The driver of house prices in the near-term will be the resilience of the economy and the outlook for the labour market both of which appear to be showing cracks."