The Bank of England came under mounting pressure to cut interest rates as early as next month today as official figures from Britain's high street banks showed that new mortgage lending dropped by 43.5 per cent last month compared with last November.

The British Bankers Association revealed that banks lent just £4.3 billion to homebuyers last month, £500 million less than October, more than £1 billion below the average over the previous six months and the second successive monthly slide.

Banks approved only 44,811 mortgage loans in November, marginally higher than October but still the second-lowest level since records began.

The figures provided the latest evidence of a marked slowdown in the UK housing market amid signs of a sharp slowdown in consumer confidence.

The BBA's bleak assessment of the mortgage market sent economists scrambling to predict fresh falls in house prices next year and shorten the odds on the Bank cutting interest rates in January, which would be the second cut in as many months.

Howard Archer, chief UK and European economist at Global Insight, said he now predicted that house prices would fall 3 per cent next year and would remain in the doldrums well into 2009. Before the BBA's data was published today, Mr Archer had expected house prices to stay flat in 2008.

Mr Archer said: "The weak mortgage data for November provides yet further evidence that housing market activity is now slowing markedly in the face of stretched affordability as well as the tightening lending practices resulting from the credit crunch."

Despite a rush to the retailers' sales during the past two days, household finances have been stretched to the limit this year, as the cost of borrowing continued to rise and the high oil price saw utility bills rocket.

Homebuyers, particularly those seeking a first rung on the housing ladder, have also come under further pressure as mortgage lenders have tightened up their criteria in the wake of the credit crunch.

The Bank was unanimous in its decision to cut interest rates by 0.25 per cent to 5.5 per cent last month.

Some leading economists are predicting it will cut rates by a total of 1 per cent next year, returning borrowing costs to the 4.5 per cent level they stood before the Bank began increasing rates last year.

Mr Archer said house prices in London could be particularly hard-hit, if the City unleashes a wave of job cuts as predicted this year. A slump in bonus payments would also act to provide an effective cap on prices.

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