According to the British Bankers’ Association, mortgage approvals - loans agreed but not completed - fell to 64,683 over the month after March’s sharp jump to 85,698.

Signs of a cooler housing market will ease pressure on the Bank of England to raise interest rates in the short term.

However, the BBA attributed much of the fall to the lower number of working days in April than in March, after a late Easter this year. It added that the number of approvals remain in line with recent trends.

"Mortgage approvals were predictably weak in April due to there being fewer working days. However, after allowing for working day effects, approvals were much in line with expectations," David Dooks, director of statistics at the BBA, said.

Meanwhile, net mortgage lending rose by £4.88 billion in April, down on March’s figure of £5.51 billion, which was the highest figure since June 2004. The figure was in line with the average of £5 billion over recent months, the BBA said.

Gross mortgage lending also dropped to £15.5 billion in April from £17.67 billion in March but still comfortably above February’s reading of £14.03 billion.

Howard Archer, the Global Insight economist, said: "The BBA data suggest that housing market activity is now levelling off at a relatively healthy level after picking up markedly since spring 2005."

"We suspect that the upside for housing market activity will be increasingly limited over the coming months by the recent overall marked firming in house prices, as well as by mounting buyer concerns that interest rates could start to rise sooner rather than later."

According to the BBA, unsecured lending remain subdued, with net lending on loans and overdrafts up by £200 million in April, reversing March’s £200 million fall and compared with an average rise of £300 million over the previous six months.

Net lending on credit cards rose by £100 million, compared with a fall of £200 million in March and a recent average increase of 100 million.

"It is clear that consumers were showing little appetite to take on additional unsecured borrowing," Mr Dooks said.

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