Lending to businesses also declined in November, the Bank revealed, with small firms in particular finding debt more expensive.
New loans rose to 52,854 in number for the month, just 68 higher than in October – a growth rate of 0.13 per cent, down from three per cent in October. Remortgages fell by 8.4 per cent month on month in November, accelerating the decline seen earlier in the autumn.
Total home-secured lending fell 2.5 per cent in the month, to £12.1bn.
“The modest rise in mortgage approvals to a 23-month high fails to mask the fact that housing market activity remains very weak and has been unable to develop significant upward momentum,” said Howard Archer from IHS Global Insight.
“With the economic environment looking decidedly worrisome, we believe that house prices are headed downwards in 2012.”
Lending to non-financial businesses fell by £300m in November, though remains up £200m in the three month period compared with the same time in 2010.
Analysts are also concerned at the widening spread in bank lending rates on business loans.
For loans of under £1m – typically lent to small firms – average interest rates rose from 3.63 per cent in October to 3.81 per cent in November. Loans of over £20m saw rates falling from 2.23 per cent to 1.72 per cent.
“Unless the cost and availability of credit for small firms improves markedly, the government may well over time have to act,” said Citi economist Michael Saunders.