Mortgage approvals fall by 10,000 in January

House purchase approvals were 35,083, a drop from 45,650 in December while remortgaging approvals dropped from 23,609 in December to 20,252 in January.

The BBA, which record lending for the main high street banks, said the level of approvals were weak due to an inflated market in December as borrowers pushed through transactions ahead of the removal of Stamp Duty relief.

It also blamed the very cold weather for deterring would-be home buyers.

Gross mortgage lending also fell sharply. It measured £8.0bn, which was 17.5% lower than a year ago and down from December's figure of £10.9bn.

David Dooks, BBA statistics director, 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".

Andrew Montlake, director at Coreco, said he expected to see stronger figures from February as activity had begun to pick up towards the end of January.

He added: "January's figures should not dampen the spirits as the mortgage market has got off to a flyer compared to this time last year, with hundreds of new products hitting the market and enquiry levels rising dramatically."

But he added: "Let's not be under any illusions here, the mortgage market, like the economy, is still in the very early stages of recovery and could be set off course by any number of external factors. But in the meantime, now is the best time in a long time to take advantage of some highly competitive products."