RESIDENTIAL mortgage lending last month continued to feel the effect of tight bank lending policies, with total outstanding loans in the sector falling 0.01 per cent year on year. Activity in general was flat. In September there was a year-on-year rise of 0.8 per cent. The gross total loans made in October, along with the number of accounts, was the lowest since March. Hong Kong Monetary Authority deputy chief executive David Carse said: ''This is the first monthly fall since February this year, reflecting a consolidation of the property market in the light of the tightened lending policies recently adopted by the banking sector.'' New loans approved but not yet drawn also fell slightly in number and value. In number they were down 3.7 per cent from 2,186 to 2,105, and in value they fell 10.34 per cent to $2.6 billion from $2.9 billion. Mr Carse said he expected the amount of outstanding lending to be little changed in November. New loans approved but not yet drawn are also at a 10-month low, and the total outstanding balance at the end of October slipped back for the second time since December 1991. SG Warburg Securities property analyst Michael Green said the figures were in line with expectations. ''I do expect, however, an upturn in activity after Chinese New Year next year with more supply and property becoming available for pre-sales and with more lending by property developers,'' he said. A monetary authority spokesman said that although the authority welcomed the apparent slowing of the residential property market, activity in the past two years had taken a cyclical pattern and the present position might prove temporary. Mr Carse said: ''Institutions should therefore continue to adopt a cautious approach.'' The survey takes in 28 financial institutions in the territory. Lending for properties in China rose 2.3 per cent from $3.1 billion to $3.2 billion. New loan approvals fell slightly from $184 million to $176 million.