Britons, beset by higher interest rates, cut back on high street shopping but not house purchases last month, with mortgage lending reaching a record high.

National Statistics said that retail sales declined in July by 0.4 per cent, the first drop in more than a year and twice the decline that the City had expected. Household goods shops were the only retailers to buck the trend, with discounts helping furniture stores.

The Centre for Economics and Business Research said the fall could be the first evidence that Britons have begun to react to a series of interest rate rises.

"The UK consumer boom may be finally over," Andrij Halushka, the CEBR economist, said.

The Council for Mortgage Lenders, however, revealed record gross lending of £29.1 billion last month, 3 per cent more than in June and a 13 per cent improvement on the figure for July 2003.

The increase reflected increased demand by homebuyers, with remortgaging accounting for 39 per cent of the borrowing compared with 44 per cent a year ago. The number of mortgages advanced for home purchases was, at 131,000, the highest for nearly two years.

Michael Coogan, the council's director general, said: "These figures clearly do show that there was a strong seasonal revival in the house purchase market this spring."

The reports come a week after the Bank of England predicted simultaneous downturns in consumer spending and the property market which would force a dip in economic growth next year.

Many property market watchers, including the Royal Institution of Chartered Surveyors, have noted a slowdown in the pace of property price rises after five increases in interest rates since November.

Separate data from the British Bankers' Association showed a decline in mortgage lending last month from June's figure to a level in line with the recent average.

Mr Coogan said that, with mortgage approval data based on decisions taken by homebuyers some week before, this morning's CML figures may not conflict with observations of a slowing market.

"Estate agents are continuing to report a slowdown in current activity in their offices but this will not be reflected in lending figures for a few months," he said.

Today's BBA report also showed a slide in unsecure lending last month 30 per cent below the recent average, with demand for personal loans "particularly weak".

Explore Economics

• Pre-Budget Report 2009

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive