Activity in the housing market lost its recent momentum last month to judge from numbers from the mortgage lenders showing that their lending for house purchase slipped back marginally between June and July.
Home- buyers borrowed £11.8 billion last month, £200 million less than in June and 19 per cent less than in July last year, before the housing market stalled, according to the Council of Mortgage Lenders speaking for both banks and building societies.
Re-mortgages increased by a similar amount to £10.3 billion, 41 per cent of all lending to home- buyers against 39 per cent in June.
As in June, first-time buyers accounted for 29 per cent of the loans for house purchase.
"Today's figures indicate that the housing market has started to stabilise at a new lower level last seen in 2003," commented Michael Coogan, the CML's director general.
"The recent 0.25 per cent cut in interest rates by the Bank of England should help ensure that this stability continues over the coming months by giving a much needed boost to consumer confidence about future interest rates.
"Our recently published forecasts predict a steady housing market in the next couple of years and so we expect to see similar levels of lending in the coming months".
But Ed Stansfield, property economist at Capital Economics, described the mortgage numbers as disappointing.
"Many people would have hoped that the prospect of interest rate cuts would have ensured a continuation of the recent upward trend," he said.
"The fact that all measures of lending in July fell back will raise fresh doubts that activity levels in the housing market are through the worst."
Total mortgage lending, including loans for equity release - but not allowing for repayments - dipped by two per cent in July to £25.2 billion, 13 per cent less than in July last year.
The average rate for fixedrate mortgages declined for the ninth month running to 5.31 per cent, while a slightly larger dip in the cost of variable rate mortgages reduced their average cost to 5.68 per cent.
Fixed- rate packages accounted for half all the month's home loans, up from 47 per cent in June.
In the Black Country, the Chamber of Commerce attacked Mervyn King, governor of the Bank of England, for sending the wrong signals to industry by voting against this month's quarter-point cut in the Bank's official interest rate.
Keith Stanley, the Chamber's Walsall director, said "The danger is that the Bank will be reluctant to cut rates further given the fact that the governor voted to keep them at 4.75 per cent.
"We need further cuts to kick-start business."
Inflation is being driven by higher energy costs, caused by global factors which are not greatly influenced by UK interest rates, Mr Stanley added.