This is marginally lower (1%) than June’s gross lending figure of £12.68 billion and a 6% fall from £13.3 billion in July 2010.
In today’s market commentary, CML chief economist Bob Pannell observes:
"UK economic prospects have deteriorated as a result of weaknesses in some of the major economies and renewed stresses in the eurozone area associated with the sustainability of government finances.
"As a result, UK interest rates look like staying lower for longer.
"Housing market conditions remain subdued, but pretty stable. Seasonal factors continue to provide some support, but underlying house purchase activity may drift lower over the coming months."
Chris Gardner, director of mortgage broker obligo.co.uk, commented:
"After the recent slew of almost painfully negative economic data, finally some cause for limited cheer.
"With both a month on month fall, and an annual drop in gross lending, the nation's mortgage debt mountain is slowly being whittled away.
"We're seeing some luckier borrowers make the most of low interest rates as an opportunity to pay off their mortgages more quickly.
"And with so few new mortgages being granted, the industry is not replenishing the loans which are being paid off.
"As many of their customers leave faster than they can be replaced, mortgage lenders are running flat out just to stand still.
"So while this is bad news for lenders as they chase such low levels of demand, it can only be good news for the economy.
"As consumers slowly shed their debt millstones, there's an outside chance that consumer confidence will improve.
"And a consumer-led recovery is still the best, or even only chance for the economy to pick itself up off the floor."
Richard Sexton, director of e.surv chartered surveyors, said:
"July's subdued figures confirm that June was just a fleeting uptick. The banks are handcuffed by weak economic growth and concerns over their capital liquidity. They have pushed out well-publicised high LTV products over the summer, but appearances can be deceptive.
"In practice, lenders are being forced to target low LTV borrowers - less than 10% of approvals in July were for those needing high LTVs. There is a discernible gulf between interest rates on low LTV deals, which are tantalisingly cheap, and the more restrictive rates on deals at 90% LTV and above.
"As a result, great swathes of lower income buyers are marooned in the rental market while the lowest rung of the property ladder hovers just out of their reach."
Paul Hunt, managing director of Phoebus Software said:
“It would be easy to think a 6% fall from what was very subdued level of lending 12 months ago means the mortgage market is falling off a cliff. But there are signs that lending has been remarkably resilient.
"Price competition is intense and Chelsea BS’s 3.39% 5 year fix shows that below 70% LTV, lenders are giving borrowers a full opportunity to take advantage of ultra-low interest rates.
"When you bear in mind that in the UK, growth currently looks fragile and that the eurozone debt crisis means lenders are anxious to maintain a high level of liquidity, July’s lending figures could have been a lot worse.”
David Brown, commercial director of LSL Property Services said:
“July was a tough month for prospective homebuyers hoping to obtain finance for a property purchase.
"What will add to their frustration is that now is a great time to buy. Prices are currently at their lowest level since December 2009 and with rates set to remain low, mortgage lenders are offering record-breaking cheap deals.
"This gives a huge advantage to buyers with large deposits. Lenders are looking to increase their activity to those who are a safe bet, but higher LTV borrowers are losing out.
"The growing concern about growth in the UK economy and the debt crises in the Eurozone and the US have left lenders skittish and means would-be buyers are being forced into the booming private rental sector."
Nick Leeming, business development director of zoopla.co.uk, said:
"Banks are primarily focused on lending to wealthier buyers, and as a result these buyers continue to represent a disproportionate share of mortgage lending.
"Deals on low LTV products are remarkably cheap, while qualifying criteria on higher LTV products borders on the draconian and aren't appropriate to the financial hardships afflicting first time buyers.
"Restrictive criteria are suffocating the bottom of the market, which in turn is exerting downward pressure on prices and has choked activity across all price brackets.
"First time buyers are the engine which drives the property ladder, and until they are given some relief the property market will remain in a state of gridlock."
