Shattered confidence in the housing market shows no signs of recovery, gloomy mortgage figures revealed today.

The number of home loans approved for buying houses and flats was virtually unchanged last month from June - but almost two thirds down on a year ago.

Figures for last month suggest firsttime buyers are still struggling to raise finance and potential purchasers remain fearful of committing to a market they believe has further to fall.

The 22,448 loans for people moving home was 65 per cent less than in July last year, according to the British Bankers' Association. Loans were worth a total of £3.2billion, 69 per cent down.

The activity is a fraction of the levels seen during the boom years before the credit crunch struck last autumn. In March 2002 almost 92,000 mortgages were approved by the major banks.

Measured by value, the record month was November 2006 when new mortgages worth £11.87billion got the green light.

The property market has virtually ground to a halt this year, particularly in London, in a phenomenon dubbed "brickormortis".

This is when buyers refuse to pay the asking prices demanded by vendors and sellers refuse to lower their prices because they are not under any great pressure to move.

David Dooks, the BBA's statistics director, said: "The monthly numbers of approvals for house purchase, which have fallen by some two-thirds over the last year, levelled off in July.

"It would, however, be premature to think that the housing market will now start to recover, because overall approval activity continues to be very low."

The value of all approved mortgages - which includes remortgaging - dropped by seven per cent last month to £11.8billion, 44 per cent lower than a year earlier.

People switching lender continued to account for more than half of all loan approvals last month.

The BBA figures also showed that unsecured lending remained subdued with credit card spending hitting a 13-month low of £7.1billion.

Consumers continued the current trend of repaying more than they spend, reducing their debt by £7.4billion last month, although this was the lowest level for more than a year.

But in a further sign that consumers' incomes are being stretched, people collectively saved only £800million last month, well down on the average during the previous six months of £2.8billion.

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