There were 20,800 loans in the fourth quarter valued at £5.8bn – 16% lower than quarter three and 6% lower than in Q4 2013.
Paul Smee, director general of the CML, says: "London is a unique market, with equally unique conditions and challenges, which will need a focus on all types of housing tenure going forward.
“2014 had the highest annual level of borrowers buying a home in London since 2007, with first-time buyers leading that growth, but there have been recent signs of the market cooling.
"The dip in the last quarter of the year may suggests that affordability pressures do still persist in the capital.
“Alongside a general steadying of lending across the UK, this may lead to slightly more subdued activity in 2015."
Remortgage lending in the capital declined by 12% in volume and 13% in value quarter-on-quarter, as there were 9,800 loans valued at £2.5bn in Q4 2014.
First-time buyer lending fell by 11% in value to stand at £2.9bn and 7% in volume, representing 12,000 loans. Year-on-year first-time buyer lending fell by 10% in volume and 4% in value.
Peter Rollings, chief executive of Marsh & Parsons, said: “London property prices have surged upwards a lot quicker than in other regions over the last year, riding the relentless wave of demand to live, work and invest in the city.
“This growth has recently eased off onto a more sustainable track, and this is boosting the optimism of buyers.
“As more homes come onto the market - and factoring in enticing mortgage rates and lower Stamp Duty costs – now is a positive time for buyers to jump onto – or move up – the ladder.”
Stephen Smith, director, Legal & General Mortgage Club and Housing, added: “These figures show that the housing market is moving at a different speed depending on where you are in the country as data from Northern Ireland and Scotland show.
“Overall we expect 2015 to be an even stronger year than 2014, with gross mortgage lending set to hit around £225bn up £19.4bn from 2014.”
