The amount of credit available from banks will be further reined in over the next three months as lenders keep a tight grip on the numbers of mortgages, credit cards and loans approved.

The amount of credit available from banks will be further reined in over the next three months as lenders keep a tight grip on the numbers of mortgages, credit cards and loans which are approved.

The Bank of England said yesterday that the number of mortgages granted for house purchases had fallen to an all-time low in November with just 27,000 loans arranged - down 13% on the year before and just a third of the 2007 rate for that month. A further decline is expected in all forms of lending as banks aim to reduce risk in their business.

Further caution was exercised yesterday by Nationwide, Britain's second-biggest mortgage lender, which said it will not pass on any further Bank of England rate cuts to customers holding tracker loans.

The move by the building society, which was one of eight major lenders to take advantage of the government's £400bn bail out package for UK banks, defied pressure from the Treasury to pass on any further cuts in the central bank base rate to customers.

Nationwide claimed that no more reductions would be available so it could keep its interest rate for savers high.

But the Treasury moved quickly to condemn the announcement. A spokesman said: "The Chancellor has repeatedly made clear that he expects lenders to do their best to help their customers through these difficult times."

There are some 4.2 million borrowers in the UK who have a tracker deals for their home, where interest payments mirror changes in the central bank base rate. Each half-point cut saves someone with a £150,000 mortgage about £50 a month.

Homeowners felt a further squeeze yesterday as the Halifax, Britain's largest mortgage lender, recorded a fresh fall in house prices in its monthly index. A Scottish figure will be available in the next fortnight, but the UK average value now sits at £159,896.

It represents a fall of 2.2% between November and December 2008, taking values back to the same level as in August 2004.

Martin Ellis, chief economist for the Halifax, said: "There was a 2.2% decline in average UK house prices in December. Continuing pressures on incomes and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to exert further downward pressure on the market. But a number of factors will help to support demand and should help to limit the down turn."