The number of mortgage approvals granted fell from 46,186 in November 2022 to 35,612 the following month, new Bank of England (BoE) figures show.
The value of these approvals fell from £10.2bn to £8.1bn on the month.
This compares to a six-month average of 62,180 approvals and a value of £14.1bn.
Remortgage approvals decreased too – from 32,588 in November to 26,141 the following month and, in terms of value, from £6.9bn to £5.6bn.
Here, the six-month average equals 45,938 approvals at a value of £9.4bn.
The figures also show that net mortgage borrowing in December came to £3.2bn, dropping from £4.2bn in the preceding month and gross lending amounted to £23.3bn in December after reaching £25.1bn in November.
MT Finance director Tomer Aboody says: “With consecutive months of lower mortgage approvals, we are seeing the impact of higher interest rates on mortgage borrower sentiment, not only on purchases but refinancing.
“Borrowers may well be waiting to see how the next few months pan out with regards to further hikes in interest rates before deciding to settle on a fixed or variable product.”
He continues: “With the housing market set to get busier as we head into spring, buyers will either have to manage their dream home expectations or come to terms with higher rates.
“We expect to see an uptick in purchases, especially if the government gets involved in terms of assistance with stamp duty payments or the banks show more flexibility when it comes to approving mortgages.”
And Phoebus Software chief revenue officer Adam Oldfield comments: “There is of course the next MPC interest rate decision on Thursday to factor in.
“The majority of economists believe that the bank will raise the base rate again, but it is by no means a foregone conclusion. Even if the bank’s rate does go up it may not have the immediate effect on mortgage rates that consumers tend to associate with a base rate rise.
“We have seen the average two- and five-year fixed rates falling since November as lenders battle it out for new and continuing business.”
