BBA statistics director, David Dooks, said: "High street banks are still providing two-thirds of all new mortgage lending, although the overall market continues to shrink.
"The 1.5% November reduction in Bank Rate caused lenders to re-assess product ranges and borrowers to re-consider future borrowing costs, so consequently there was another drop in market activity.
"Volumes of mortgage approvals reached new lows and, with house prices still falling, the encouragement of lower costs had not filtered through by the month-end, largely because people remain concerned about the impacts of the rapidly slowing economy on their personal finances.
"There was an increase in deposits, in part reflecting the receipt of savings reclaimed from accounts in Icelandic banks."
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