The number of mortgages approved by banks fell to their lowest since June last year in October, figures by the Bank of England showed today.
There were 59,426 approvals for house purchases during the month, down from 61,234 in September. That's down from an average of 63,727 over past six months.
Mortgage approvals have been dented in recent months by the Bank of England's Mortgage Market Review, implemented in April, which imposed strict lending conditions on banks. Borrowers have to undergo "stress tests" to assess whether they would be able to continue paying their mortgages if interest rates rose suddenly, while lenders are prevented from lending at more than 4.5 times people's income.
As a knock-on effect from the review, house price growth in the UK has slowed. Figures published by estate agent Haart last week showed house price growth in the capital had fallen to 0.3 per cent between September and October, below the national average of 1.2 per cent.
Howard Archer, chief European and UK economist at IHS Global Insight, suggested "significant restraint on house buyer interest" is expected to come in 2015.
[Restraint will] come from more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the prospect that interest rates will eventually start to rise in 2015. Many people may also be deterred from buying houses because they look pricey in a number of areas after recent sharp rises.