Mortgage lending fell 10% in December, but was still at record levels for the month, figures showed.
Homebuyers borrowed £29.4bn from banks, building societies and specialist firms, the Council of Mortgage Lenders (CML) said in its monthly report.
This compared to £33.1m in November but was 8.8% higher than in December 2005.
The CML predicted that high prices and demand for homes would continue and that mortgage lending would top the £346bn that was borrowed in 2006.
That figure was 20% up on the figures for 2005.
Cooling off
However the CML added that the latest interest rate hike may deter some would-be homeowners from getting onto the property ladder.
Earlier this week, the CML said that first-time home buyers in the UK were borrowing an average of £113,887 to pay for their first properties - equivalent to 3.29 times their incomes.
The latest Royal Institution of Chartered Surveyors (RICS) report said the market was now starting to cool down, largely as a result of rate rises imposed late in 2006.
Source: BBC News Online
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