UK mortgage approvals have fallen to their lowest level in around three years, according to data released by the Bank of England (BoE) on Tuesday.
The figures showed just 61,039 mortgages were approved for home purchases in December, lower than the 64,712 of the prior month and the smallest number since January 2015.
It also fell short of the 63,500 approvals economists had expected.
Economists believe the slowdown in the mortgage market reflects the BoE´s 0.25% November hike in interest rates as well as the continued squeeze on spending power as inflation continues to outstrip wage rises.
Nevertheless, growth in lending to consumers outpaced forecasts, rising to £1.52bn in December, amid strong growth in unsecured consumer borrowing.
“The outlook for house prices and big-ticket household goods purchases has darkened. Looking ahead, with new buyer demand still weak, mortgage approvals are likely to remain subdued,” said Paul Hollingsworth of Capital Economics.
Data from Halifax released earlier this month showed UK house prices declined in December, with the market registering its first fall since June.
The lender said the average price of a UK home fell by 0.6% to £225,021 in December, with the annual growth rate easing to 2.7% in the three months to December from 3.9% in the prior three months.