Connells Survey and Valuation’s new analysis of the mortgage market showed that mortgage approvals for UK home purchases dropped to 66,000 in December, 21% below November’s level and 43% below December 2006.

The dramatic decline in mortgage approvals is due to the tightening of credit available to households, a reduction in confidence among home buyers and disruption caused by the introduction of Home Information Packs (HIPs) across all properties.

Ross Bowen, managing director of Connells Survey and Valuation, said: “Mortgage approvals have been falling since January last year, but this decline accelerated in the second half of the year and was most acute in December. Much of this was due to the problems in the money markets. This has led to a significant reduction in transaction levels. Unsurprisingly there are no signs that December’s base rate cut has provided a catalyst for improvement and we urge the Bank of England to implement the next cut in rates in February to help start the process of restoring confidence to the markets.”