A car, black walnut flooring and plantation blinds in the kitchen.

The young man behind me on the number 94 bus was listing to a friend the purchases he had made with loans taken out against the value of his flat. His extravagance typified the conviction that property price increases would continue unabated, making it acceptable to use your home as an ATM.

That was six months ago, before sub-prime slime. The latest sobering statistics from the British Bankers’ Association (BBA) indicate this busy consumer on the 94 and the rest of his breed are now curbing their bricks and mortar-financed spree – bad news for anyone selling walnut flooring at £80 a square metre. Others are postponing their ambition to move further up the housing ladder. A total of 38,471 equity release loans were taken out in October, a fall of 20 per cent over a year. The number of mortgages approved during the month - 44,105 – was down 37.4 per cent over the same period, suggesting the slowdown could inflict more pain than previously thought in some sectors of the market. The BBA numbers support the view that the market is stagnating rather than slumping.

The young man on the bus was unaware that many forecasters were already arguing late last year that problems with affordability would put a brake on growth. But the continued surge in prices in a market short of supply encouraged many homebuyers to shrug off concerns about rising interest rates.

The BBA figures show that affordability has – at last – become a worry, but for reasons that could not have been expected last Christmas. There could be two base rate cuts next year, but many lenders may not pass on the benefit to borrowers. Lenders will be seeking to repair the damage done to their balance sheets following sub-prime losses and the Northern Rock debacle.

Expect your lender to have a Scrooge-like demeanour at Christmas and for some months after.

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