"This data could be taken as the latest sign that nervousness over inflation and household finances is starting to drag on what has been an overheated sellers’ property market."
Mortgage approvals for house purchases also decreased to 66,000 in April from 69,500 in March.
Both measures are slightly below their 12-month pre-pandemic averages up to February 2020.
Approvals for remortgaging with a different lender decreased to 47,800 in April. This also remains below the 12-month pre-pandemic average up to February 2020 of 49,500.
Gross lending rose slightly to £26.5 billion in April from £26.2 billion in March, while gross repayments increased to £21.5 billion in April from £20.0 billion in March.
The ‘effective’ interest rate paid on newly drawn mortgages increased by 9 basis points to 1.82% in April.
Adrian Lowery, financial analyst at investing platform Bestinvest, commented: “This data could be taken as the latest sign that nervousness over inflation and household finances is starting to drag on what has been an overheated sellers’ property market.
“Online portal Zoopla revealed this week that one in 20 listed properties reduced their asking price by 5% or more in April to mid-May, more than in previous months. It added that buyer demand remains high but there are now signs that the market is softening, and price growth is set to slow. And it estimated that the average price reduction across the UK is 9%.
“Further hikes to the Bank Rate are expected in coming months as the Bank of England seeks to rein in soaring inflation. And fears of further mortgage rate rises have been pushing more and more homebuyers and remortgagers to look for longer-term fixed-rate mortgages."
CEO of Octane Capital, Jonathan Samuels, said: “While our unquenchable thirst for homeownership remains, we’re starting to see many lenders reign in the range of products they are offering, as well as the rates they’re prepared to offer them at.
"The consequence of this is naturally going to be a reduction in buyer activity coming via the mortgage sector, as many homebuyers are now finding they simply can’t secure the home they want, with a mortgage that suits their financial situation.
"However, those that can, are still entering a market that is desperately low on stock. So while mortgage market activity may be waning somewhat, property values are likely to remain robust.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, added: "Mortgage approvals are always a good lead indicator of housing market direction. This latest reduction confirms what we have been seeing at the sharp end over the past few months – successive monthly increases in the cost of living as well as interest rates are compromising confidence to take on additional debt and having an inevitable knock-on effect on price growth.
"The continuing shortage of houses in particular means that we’re unlikely to see significant changes in prices but certainly there is less competition, which is also resulting in more time being taken to exchange contracts."
