The latest Building Societies Association figures shows gross mortgage advances falling to £1,487m in December 1998 from £1,622m in November.
The net figure fell to £120m from £534m, the lowest monthly figure for the whole of last year.
But in seasonally adjusted terms, the drop was only slight with net advances down to £527m in December from £597m in November.
In the savings market, societies attracted £545m worth of business in December up from £515 in November.
BSA director general Adrian Coles says: "On a seasonally adjusted basis December saw building society net advances fall to their lowest point for 1998. However, it is difficult to compare this annual low with other years because of large scale restructuring in the sector in 1997."