Gross mortgage borrowing in December was £10.0 billion, 12% lower than in the same month last year, according to the British Bankers’ Association (BBA). However, over the whole year, gross mortgage borrowing was £130 billion compared with £110 billion in 2013.

Despite continuing to slow in December, the number of house purchase approvals in 2014 was 9% higher than the previous year.

“The mortgage market has been softening since the spring, but for customers taking out home loans right now there are some great deals and we expect the market to begin to grow again this year,” said Richard Woolhouse, chief economist at the BBA.

“Robust employment data is making many of us feel more secure in our jobs and optimistic about our futures. That’s now feeding through to personal lending and credit card data, suggesting people are happy to finally replace the car or spend on household improvements.

“Outstanding business lending has been falling as larger firms have used the bond market rather than borrowing from banks. Despite this, outside real estate businesses are generally expanding their lending.”

Richard Sexton, director of e.surv chartered surveyors, added: “2014 was a tale of two halves – with strong lending in the first half and a more subdued second. The important thing to remember is that seasonal trends are far from the only ones that affect the mortgage market. The market doesn’t always split itself easily into quarters and halves, so a wide-angle view is required to identify the prevailing trends.

“In the longer term, we can see that purchase mortgage lending was heading for a peak in January 2014. The reasons for the subsequent drop are clear in light of changes to Funding for Lending. In January, the scheme ceased to apply to home purchase mortgages. The changes were implemented because house purchase approvals in the last half of 2013 provoked fears of an overheated market.”