Approvals for remortgaging rose, however, increasing from 34,100 in June to 34,500 in July.
Gross mortgage lending fell slightly from £26.9bn in June to £25.9bn in July, falling below the six-month average of £26.4bn.
Repayments increased slightly in July to £21.3bn, from £21.2bn, still above the six-month average of £20.8bn.
Net borrowing of mortgage debt by homeowners decreased to £4.3bn in July from £7.7bn in June, sitting well below the previous six-month average of £5.3bn.
Mortgage rates on newly-drawn mortgages rose from 4.35% to 4.45% between June and July, while the average mortgage rate on the outstanding stock of mortgages ticked up from 3.96% to 3.97%.
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The annual growth rate for net mortgage lending remained unchanged at 3.6% in July.
Nathan Emerson, chief executive at Propertymark, said: “Recent months have seen lower levels of mortgage approvals and lending, reflecting continued pressure on household finances and caution around moving home.
“With the Autumn Budget due next month, many people may be holding back on major housing decisions until there is greater economic clarity, particularly groups such as first-time buyers, for example.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the dip in approvals signalled that buyers and sellers remained cautious about prospects while economic and political factors remain uncertain. However, he noted that the number of buyer enquiries was increasing slowly.
He added: “We are hoping that demand will increase now that the holidays are behind us and buyers can take advantage of better affordability, with salaries increasing faster than house prices despite the increase in mortgage costs since the start of the year.”
