"There was a welcome increase in number of first-time buyers as they continue to take advantage of the more level playing field between them and buy-to-let investors. "
In total £69.1 billion of new residential loans were advanced to individuals during the quarter, a 2.5% decrease compared to the previous quarter but a 10.1% rise from the same quarter last year.
The Bank of England added that although lending activity decreased in Q4, "it is still higher than levels seen prior to Q3".
Despite a dip in lending and a fall in lending at above 90% LTV, the share of first-time buyers has risen to 21.1%, a 0.5% increase on the previous quarter.
Lending at above 90% LTV decreased by 0.5 percentage points from the previous quarter to 3.8%, however the data shows that the decrease in new lending at higher LTVs is due to an increase in remortgaging.
The proportion of lending to remortgage borrowers increased by 1.4 percentage points from 28.3% to 29.7%.
At the same time, lenders saw a 1.5 percentage point decrease in the proportion of new loans for house purchases from 65.9% to 64.5%, driven by a decrease in home movers.
The share of buy-to-let lending also fell to 12.7% in Q4 2017, the lowest percentage since Q3 2013.
The proportion of loans in arrears continued to decrease over the quarter to hit a new record low.
Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "New residential mortgage lending declined in the fourth quarter compared with the preceding one, as fewer people moved house. This may be down to several reasons, including a traditionally quieter period of the year for the housing market, lack of stock, continued uncertainty surrounding Brexit and fears regarding potential interest rate rises in the future, following November’s increase.
"Remortgaging rose, as borrowers took advantage of low mortgage rates before they disappear, and worry about potential interest rate rises. Remortgaging continues to be strong into this year, even though many lenders have now repriced their rates slightly higher in anticipation of another rate rise sooner rather than later.
"There was a welcome increase in number of first-time buyers as they continue to take advantage of the more level playing field between them and buy-to-let investors. Lending for buy-to-let was subdued as the impact of the stamp duty surcharge and the phased introduction of changes to mortgage interest tax relief continues to act as a deterrent for some. It is more likely to be would-be novice landlords having second thoughts about investing in property as we are seeing experienced investors remain committed to the sector, with a significant proportion incorporating. Lenders are increasingly offering products aimed at this group, so rates are competitive."
