Home loan approvals by high street banks in the UK fell sharply in January, after the stamp duty relief ended on smaller property transactions.
Stamp duty on home sales are now at £125,000, after a higher threshold of £175,000 was seen to help kick-start the housing market this year.
The British Bankers’ Association (BBA) said that the poor economic condition at the start of the year deterred potential homebuyers and has affected consumer confidence to spend, leading to lower consumer credit levels.
David Dooks, statistics director of BBA, said: "It was no surprise to see the January mortgage figures falling back from December, when transactions were being pushed through to beat the end of stamp duty relief.”
"There was a natural reaction in the January figures and the bad weather further suppressed market activity.”
"After the Christmas period, demand for consumer credit was weaker in January, as people shied away, or were discouraged by the weather, from retail spending and held on to their deposits," Mr Dooks added.
Mortgage approvals in the UK were down in December at 35,083. This figure was higher than in January 2008 but was at its lowest point since May 2009.
Net mortgage lending increased £2.9 billion in January, compared with the £3.3 billion increase in December last year.
The figure in January was the slowest increase in mortgage lending since July 2009, with growing fears that the housing market may stall again this year, especially in the run-up to the general election.
Both equity withdrawal loan and remortgaging volumes were lower than the previous year, reflecting the low interest rates in the past few years. This means that many homeowners stayed on the standard variable rate rather than searching for a new fixed-rate deal.