THE property market slump continued last month after the latest residential mortgage survey showed a decline of 13.5 per cent in banks' monthly mortgage loans from June. The Hong Kong Monetary Authority's monthly survey showed gross loans made by the 33 financial institutions last month fell to $7.6 billion from $8.7 billion in June. Meanwhile, more medium-sized banks have followed their bigger counterparts in reducing their mortgage lending rates. Last month, outstanding mortgage lending grew 1.1 per cent to $258.4 billion, compared with a 1.6 per cent rise in June and the average of one per cent in the past 12 months. 'This easing of the growth rate in July reflects the more subdued state of the property market and is in line with our expectations,' David Carse, deputy chief executive (banking) of the authority, said. New loans approved during the month but not drawn edged up 0.4 per cent to $5.3 billion from $5.28 billion in June. But the number of loans dropped to 3,916 from 4,010. 'This suggests that residential mortgage loans will continue to grow at a moderate rate in August,' Mr Carse said. The sluggish mortgage market has stoked the latest bout of mortgage rate cuts started by the bigger banks. Analysts said the lending figures would have been significantly worse had it not been for the release of a few large projects by developers in June. Because of a time lag of typically about three to four weeks between buying a property and drawing down on a mortgage facility, the authority's lending figures for last month better reflected the state of the property sales market in June. Estate agents said the market for second-hand properties was dead. As transactions in the secondary market typically account for the bulk of banks' mortgage lending business, many banks have reacted with concern, cutting their margins on the mortgage lending rates and offering a variety of special incentives. As a result, Nicholas Pang, a property analyst with Baring Securities, said he expected banks' mortgage lending business to improve in subsequent months. 'It will provide an element of developer and end-user confidence which will help lift the property sales market,' Mr Pang said. The large big mortgage lenders have successively announced rate reductions ranging from 25 basis points to one percentage point, depending on the risk involved. Yesterday, more medium-sized banks joined the fray including Liu Chong Hing Bank, Wing Hang Bank and Wing Lung Bank. While some banks adopted a tiered approach in segmenting the rate structure according to the credit-worthiness of the customers, others such as Standard Chartered Bank and Wing Lung offered customers a cut of 0.25 per cent across the board. In June, Cheung Kong put more than 2,000 flats in its Kingswood Villas development in Tin Shui Wai up for sale, providing a welcome one-off boost for the mortgage lending business. HKR International sold more than 300 flats at La Costa on Discovery Bay. Sino Land and Sun Hung Kai Properties also were marketing new developments in the New Territories at the time.