The British Bankers Association (BBA) has released figures showing that mortgage approvals dropped to a new low in December, indicating further that the housing market is slowing down.

According to the BBA, seasonally-adjusted mortgage approvals for house purchases dropped by 37.8 per cent on the year down to a record low of 42,088 in December. The figure in November was 43,944 mortgage approvals.

The BBA said that underlying net mortgage rose by £4.7 billion in December, up slightly from a £4.6 billion rise in November, although still below average.

David Dooks, BBA Statistics Director, said, Mortgage lending weakened notably in the second half of 2007 as the credit crunch impacted on banks' ability to lend. At the same time, demand for mortgages also softened in the face of increased borrowing costs and lower disposable income.

The combination of these factors is resulting in the marked market slowdown and weakness in house prices we are now seeing.

He also remarked, Reports of high street sales over the Christmas period were mixed, but our figures show consumer borrowing to have been muted in December.