The latest snapshot of the mortgage market by the bank, found confidence had fallen for the second month in a row.

But while confidence fell, the Woolwich found that the demand for home loans continued to grow strongly.

The latest figures from the UK's fourth biggest lender, showed gross mortgage lending grew by 17% last month to £20bn.

This followed what the bank described as 'quiet month' in June for house buying as prospective home buyers chose to stay-put during the Jubilee weekend and World Cup.

According to the head of lending at the Woolwich, Andy Gray, July saw the housing market play catch-up, with double-digit growth in mortgage lending returning.

Confidence subsides

However, Mr Gray says that there are signs that confidence amongst home buyers is subsiding: "We have seen a clear indication that people's confidence in the housing market is starting to decline."

Last month, saw the first fall in home buyer confidence since November 2001.

In July this trend continued with 59% of those surveyed saying that they felt the market would expand, a fall from 61% in June.

Hotspots

However, in the two-areas of the country that have experienced the greatest rise in house prices over the last year - East Anglia and the South West - buyers are still bullish about prices.

Nearly three quarters of buyers in the South West and two thirds in East Anglia believe that prices will rise strongly in future.

The Woolwich, though, is less sure.

Mr Gray said lower confidence would dampen demand and house price growth would be moderate over the coming months.