Mortgage approvals for home purchases have dropped, fuelling concerns that house prices may start falling as wages are squeezed by rising inflation.
House purchase approvals fell to 42,613 in February, higher than the monthly average of 41,287 from last year, but down by 4.6 per cent on the figure recorded in February 2016, according to figures from the British Bankers' Association (BBA).
Remortgaging also dropped off last month, despite record-low interest rates. The number of remortgage approvals fell to 25,414, which was 9.5 per cent lower than the 28,088 approved in January.
Gross mortgage borrowing hit £13.4bn in February, up 4.6 per cent year-on-year.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Housing demand has begun to relapse now that real wages are falling and mortgage rates have hit a floor. Admittedly, approvals were still 3.7 per cent above their 41,100 average of the prior 12 months.
"But the new buyer enquiries balance of the Rics residential market survey fell to zero in February — its lowest level since August — from plus three in January."
Eric Leenders, BBA managing director for retail banking, said: "Elevated approval volumes for house purchase and re-mortgages experienced during the winter months fell back in February, to average levels seen throughout most of last year."