Residential lending slipped 2.6% in the final three months of 2016 compared to Q3, according to the Bank of England.
Lending also dipped 0.4% when compared to the same period last year.
However, the share of first-time buyers (22%) reached its highest level since 2007.
The bank noted that this coincided with the increase in high loan to value (LTV) lending, but was still significantly lower than the pre-crisis level.
Overall, UK borrowers owed £17.2bn on residential property loans at the end of 2016, down 1.3% from the end of September – again the lowest figure since 2007.
Owain Thomas is Features and Contributing Editor at Mortgage Solutions. He has previously covered the protection and mortgage industry, more recently he edited Workplace Savings and Benefits, and HRD Connect.
Owain won the Financial Healthcare Journalist of the Year (B2B) at the Headline Money Awards in 2014 and 2016. He also won the Protection Review's Journalist of the Year award in 2012.