British mortgage approvals fell 11.1 per cent in December from a year ago to 45,533, a survey showed today.
The British Bankers' Association (BBA) left its figure for underlying net mortgage lending reported last week unrevised at an increase of £5.8 billion, a robust figure but well below the record £6.7 billion rise recorded in November.
The first annual fall in approvals since April indicates higher borrowing costs may be dampening demand.
BBA director of statistics David Dooks played down the fall in approvals, however, noting a broader look at the last three months of 2006 showed the housing market in robust shape.
"The final quarter of last year, despite seasonally lower activity in December, showed the mortgage market to be stronger than at the same time a year earlier and lending still growing significantly at a time of rising interest rates," he said.
The majority of house market data has depicted strong demand and price increases despite rising borrowing costs.
The Bank of England raised interest rates by a quarter-point to 5.25 per cent this month - following similar rises in August and November last year.