However, it reported its fifth consecutive month of year-on-year growth as new business rose 23% by value and 21% by volume compared to July 2016.
Data from the Finance and Leasing Association showed there were 1,977 new second charge agreements totalling £90m in July, down from £94m on 1,970 transactions.
The continued growth trend saw almost £1bn lent in the 12 months to July, up 8% on the previous 12 months.
Enterprise Finance managing director Harry Landy said the figures were likely to be part of a summer lull.
“After four months of solid growth for the sector, it’s disappointing to see second charge lending dropped slightly in July,” he said.
“However, we should be careful not to assume this blip is a new downward trend.
“The market is robust, demonstrated by four previous consecutive months of growth, so we’re cautiously optimistic lending will pick up again,” he added.
Finance and Leasing Association head of consumer and mortgage finance Fiona Hoyle (pictured) said: “In the first seven months of 2017, the number of new second charge mortgages grew by 13% to reach 12,378.
“It is important to remember that this growth is from a relatively low base. Nonetheless, the latest figures show that more customers are taking out a second charge mortgage – for example to fund renovations or help family members with a deposit for their first home.”
Unsecured lending growth
Other methods of consumer finance also grew in the month.
Credit card and personal loan new business together grew by 16% compared with July 2016, while retail store and online credit new business increased by 11%.
Finance and Leasing Association chief economist and head of research Geraldine Kilkelly added: “In the first seven months of 2017, consumer finance new business provided by FLA members was up by 6% compared with the same period last year.
“This is broadly in line with expectations for UK new consumer credit growth in 2017 as a whole.”