Lenders are predicting a slow mortgage market for the rest of the year despite reporting a 5% lift in loans in July.
The total amount of money lent in new mortgages stood at £13.6bn in July, the Council of Mortgage Lenders (CML) said.
This gross mortgage lending, which includes lending to people remortgaging as well as house buyers, was up on the previous month.
However, it was down 3% on the same month a year ago with activity in the market "subdued", the CML said.
The recovery in the housing market in the second half of 2009 had "run out of steam" at the start of 2010, the CML said.
This lack of activity among buyers has also slowed the mortgage market compared with the same period a year ago.
As a result, the CML recently revised its forecast for mortgage lending in 2010 - now saying that it expected gross lending to be at £140bn this year.
It said that mortgage lending in the second half of the year would be slower than it previously thought, not matching the pick-up at the end of 2009 brought about by buyers purchasing ahead of the end of the stamp duty holiday.
Other surveys have painted a similar picture for buyer activity.
The Royal Institution of Chartered Surveyors and the Home Builders Federation both suggested that new buyer inquiries fell relative to new seller instructions for all types of property. The number of site visits and reservations for new homes had also fallen.
Earlier this week, property website Rightmove said that sellers had been asking for lower prices for property as buyer interest had dropped during the holiday season.
Gross mortgage lending was up for the third consecutive month in July, but Andrew Montlake, of mortgage broker Coreco, said the home loan landscape was "by no means close to returning to normal".
"Mortgage lending criteria have toughened, making it difficult for borrowers, particularly the self-employed and first-time buyers who are struggling to obtain the borrowing they require," he said.
"Consumer demand will begin to rise again after the traditional summer lull, with buyers keen to take advantage of low interest rates and a softening of house prices, but I would expect the rest of the year to remain pretty subdued as lenders continue to err on the side of caution."
The Bank of England's Trends in Lending report, also published on Thursday, said that some lenders had reported that the longer-term cost of funding cost of mortgage lending had risen.
With interest rates set to remain at record lows for some months yet, the situation is much brighter for homeowners not looking to move.
Low mortgage costs have been a feature of the last year, staving off arrears and repossessions for some people, even if they have been without work during tough economic times.
"The vast majority of households continue to pay their mortgages in full every month, and many have benefited from the record low interest rates," said CML economist Paul Samter.
"This looks set to continue for some time yet. While there are a range of risks to the outlook, low rates will further help most stay on top of their finances."
The CML represents banks, building societies and other lenders who oversee 94% of all residential mortgage lending in the UK. There are 11.4 million mortgages in the UK, with loans worth more than £1.2 trillion.