Activity in the traditionally slower final quarter of the year, was 2.5% lower from the previous three months, the data showed.
At the same time, new commitments increased 5.2% annually to £64.9bn.
However, the market’s share of buy-to-let lending fell to 12.7% at the end of 2017 – the lowest percentage since 2013.
First-time buyer numbers leap
At the same time, first-time buyers’ share of mortgage lending increased to 21.1%.
The total value of outstanding residential lending stood at £1,395bn in Q4 2017.
The share of new lending in the highest loan to income (LTI) brackets increased overall compared to the previous quarter, the data showed.
However, the proportion of higher loan to value (LTV) mortgages fell, with new lending above 90% falling around 0.5 percentage points to 3.8%.
There was a slight fall in the amount of new loans for house purchases, driven by a decrease in home movers, the Bank of England said.
On the other hand, the proportion of lending to borrowers in the form of remortgages increased to 29.7% of the market.
The proportion of total loan balances in arrears continued to decrease and was at a record low of 1.08% at the end of Q4 2017.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “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.”
