British mortgage approvals fell 11.1% in December from a year ago to 45,533, the first annual fall since April, a survey showed today, indicating higher borrowing costs may be dampening demand.
The British Bankers' Association (BBA) left its figure for underlying net mortgage lending reported last week unrevised at an increase of £5.8 billion, well below the record £6.7 billion rise recorded in November.
The market expects the Bank of England to raise rates by the end of March and might even hike again later in the year, following this month's surprise increase to 5.25%.
BBA director of statistics David Dooks played down the fall in approvals - a forward-looking measure of the health of the market - noting a broader look at the last three months of 2006 showed the housing market remained strong.
But BBA approvals data has showed signs of weakening since the BoE's monetary tightening cycle began.
Approvals rose an annual 20 and 22% in May and June respectively last year.
