Mortgage lending in the UK has tailed off to the same level as that in June 2013.
This has been put down to the introduction of stricter lending criteria coupled with the prospect of an increase in interest rates.
Mortgage approvals for houses were 61,707 in May, down from 62,806 in April, the lowest they have been in 11 months, according to the Bank of England figures.
The result is a cooling down period for the housing market.
British house prices have risen by 10% in the past year, while London prices have gone up by nearly 20%. The Bank of England has said it is increasingly concerned about a negative impact of the housing market on the UK’s economy.
Last week the Bank’s Governor put a cap on mortgage lending of 4.5 times a borrower’s income.
Partly responsible for the boom in prices is the lack of sufficient housing to meet demand.
Only Switzerland and Luxembourg are building fewer new houses than the UK, according to a new study from Countrywide which compared guilding to population growth.
The UK was found to be constructing one new home for every 2.5 people, which is the third lowest ratio in Europe.
The number of new homes built in the UK fell by 35% between 2007 and 2013, more than the average decline in Europe of 32%.
Central and eastern European countries have been best at delivering large number of homes during the past decade, according to the report.
In 2007, Spain built more houses than the UK, Germany, Greece, Belgium, Portugal, Sweden and Denmark put together, but ended up with properties which could not find owners in the recession and new builds fell by 83%.
