"Market activity during a traditionally busy time of year for mortgages has been muted by funding shortages and, more recently, dampened consumer demand," said CML Director General Michael Coogan.

Mortgage lending in Britain continued to slide in June, down 3 percent on the month and 32 percent from a year ago, the Telegraph reported Friday.

Mortgage lending in Britain fell 11 percent in the first quarter compared with the first quarter of 2007 and 21 percent in the second compared with 2007, the report said.