In April, the number of mortgages approved by the British Bankers' Association (BBA) fell to its lowest point in eight months, reaching 42,200. Analysts had expected the figure to reach 45,200.
Recent data from the Bank of England has also showed a slowdown in household borrowing. However, house prices continue to surge, with the London experiencing price rises of 17.7 per cent in the year to February. The average London house price has now reached £458,000.
The previous month saw BBA loans for home purchases reach 45,900. The figures suggest that the new regulations under the Mortgage Market Review have helped to cool activity in the housing market.
"Tighter mortgage lending standards have appear to have at least temporarily taken some of the heat out of the housing market but house prices still look more likely than not to see robust increases over the coming months", said Howard Archer, chief European and UK economist at IHS Global Insight.
Lloyds Bank recently announced a clampdown on lending, saying applications for mortgages worth over £500,000 would be subject to a new income test. Borrowers will only be able to receive a loan worth a maximum of four times their income.
The government's controversial Help to Buy scheme will come under further scrutiny when the Treasury publishes data showing the impact of the policy later this week. The Prime Minister told the BBC earlier this month: "We have specifically asked Mark Carney to examine Help to Buy and to advise us if any changes are needed... We will consider any changes that are proposed by Mark Carney".