Gross mortgage lending by building societies fell by £1.27bn during the course of 2008, the latest statistics from the Building Societies Association reveal.
Building society gross lending for December 2008 was at £2.4bn, compared to £3.67bn the previous December.
Net lending by building societies for December was £324m, a massive drop from the £1.01bn recorded for December 2007.
Approvals fell to £836m last month compared to £2.98bn for the previous year.
Net receipts grew to £897m in December, up from £636m in November but markedly down from £1.89bn from 2007.
Adrian Coles, director-general of the BSA, says: “Activity in the housing market remains depressed, and as a result the amount of mortgage lending in December was low.
“House prices are widely expected to fall further and unemployment is rising, so potential buyers remain cautious and are staying out of the market as they wait for it to stabilise.”