The Bank of England has lowered its expectations for the housing market this year.

Its latest inflation report forecasts mortgage approvals for house purchase to average around 66,000 per month, down from 71,000, between now and the first three months of 2018.

The Bank also predicts that the Halifax and Nationwide house price indices will show average house prices increasing by a little less than half a per cent per quarter, down from half a per cent.

Assessing the reasons for weaknesses in the housing market, the Bank attributed some of it to the buy-to-let tax changes, but said more recent weakness in wage growth was having an impact.

It said: “Continued weak income growth in the near term is likely to mean that price inflation and activity in the housing market remain subdued over coming quarters.

“Set against that, however, mortgage interest rates remain around record lows and should continue to support housing demand, although recent increases in market interest rates are likely to push up mortgage rates a little in the near term.”

The report came as the Bank held interest rates at 0.25%. It has now been a year since the last move in rates when they were reduced from 0.5% in August 2016.

Commenting on the figures, Ishaan Malhi, chief executive of online mortgage broker Trussle, said: “For existing home owners, sustained low interest rates are good news because they keep mortgage repayments level.

“For those saving for a deposit, sustained low interest rates are bad news since their savings will continue to grow slowly.

“The glimmer of hope, particularly for first-time buyers, is that housing prices have begun to slow, making some areas that were previously unaffordable more accessible.”