According to the latest Money and Credit report from the Bank of England (BoE), the net number of mortgage applications to purchase homes fell by 3,100 to 61,000 by December 2025.
The number of remortgages approved rose by 1,600 to 38,400, while net consumer borrowing by private individuals fell to £1.5 billion from £2.1 billion in November.
Other forms of consumer credit, such as personal loans, fell from £1.2 billion to £0.8 billion.
Quilter mortgage expert Karen Noye said: “Both the Bank of England Money and Credit statistics and HMRCs data on real estate transactions point out that the housing market is strongly in a holding pattern.
“There are early signs of easing in prices, with the effective interest rate on new mortgages falling to 4.15%.
“Markets are currently pricing in the potential of two or three cuts to the base rate over the course of this year. If that materializes, mortgage rates should gradually fall, which could improve affordability and encourage more people to move. Even small cuts could make a meaningful difference to monthly repayments and stress test calculations.”
Broker and former RICS residency chairman Jeremy Leaf said: “In our offices we are noticing that the market is moving, especially since a particularly quiet December.
“Mortgage approvals always prove to be a reliable indicator of the future direction of the market, but it was no surprise that the Bank of England figures were slightly lower last month given the hit to confidence from budget uncertainty.”