Brokers have blamed the drop in gross mortgage lending in September on a combination of fragile borrower confidence and rising concern over interest rate hikes.
Tighter lending regulations may also have played a part in the 1% drop in lending compared to August, as revealed in new figures from the Council of Mortgage Lenders.
Gross lending of £17.8 billion in September was down slightly from £18 billion in August, but was still 10% higher than in September 2013.
Third quarter lending totalled £55.5 billion, which marked an 8% increase on the second quarter, and a 13% rise on the same time last year.
CML chief economist Bob Pannell said lending activity and house prices are now "sitting on a plateau". "Uncertainty over when we will see the first increase in UK base rates is exacerbated by weaker growth prospects in several major economies, including the eurozone."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the dip suggested buyers were concerned about the prospect of an interest rate rise.
"There is also a sense that economic recovery in Europe is fragile at best, which does nothing for consumer confidence when it comes to committing to something as costly as a property purchase."
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said growth had "eased into a more sedate pace" due to tighter lending conditions and uncertainty about interest rates.
"Other areas of the housing market - such as house price growth - also appear to be coming off the boil, making conditions less frantic for consumers."
But the ongoing mortgage price war should help customers find affordable mortgages and support confidence, Murphy said.
Jeremy Duncombe, director, Legal & General Mortgage Club, said: "The summer saw mortgage lending slow slightly as lenders took a breath after the implementation of MMR and the wider market started to move at a more sensible and sustainable pace.
"However, lenders are already looking to pick lending volumes up as we move towards the end of the year which benefits borrowers via more competitive pricing.
"With an inevitable interest rate rise on the horizon borrowers may want to take advantage of favourable market conditions and secure a better deal before rates creep upwards."
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