Households are facing a squeeze on their family budgets
The amount of money borrowed by people cashing in on the increased value of their homes has fallen, according to figures from the Bank of England.
Housing equity withdrawal - when owners take out bigger mortgages to spend on things other than their home - fell to £5.043bn in January to April in the UK.
This was down from £7.373bn during the previous quarter and far less than the £13.892bn of the same period in 2007.
The drop may be felt in spending across the rest of the economy.
It is the second quarterly drop in borrowing of this kind, after billions of pounds were extracted in recent years as the value of people's homes shot up.
As a percentage of post-tax income, housing equity withdrawal fell to 2.2% in the first quarter of 2008 compared with 3.2% in the previous three months and 6.3% for the same period in 2007.
Figures show that UK homeowners have borrowed about £311bn since 2000 in this fashion, but the pace is expected to continue to slow as house prices fall.
Earlier in the week, the Nationwide building society said that property prices were 6.3% lower in June than the year before - making the average home in the UK £11,500 cheaper than 12 months ago.
The lender said it did not expect the housing market to turn around in the coming months.
The Bank of England also reported earlier in the week that the number of mortgages approved for home purchases was down 64% on a year ago.
Supply or demand?
Analysts have predicted that house prices will continue to fall throughout 2008, with some expecting double-digit drops this year.
House prices have been falling, according to market surveys
But even if prices fell by 15% during the next two years, affordability prospects would not improve, according to the National Housing and Planning Unit.
The group, which advises the government on the property market, said that the situation was very difficult for first-time buyers trying to get a mortgage.
If the squeeze on lending eased, there could still be a shortage of new housing as construction had been downscaled as the market cooled.
Housing minister Caroline Flint said that the government was acting on concerns and was trying to provide more affordable housing.
She was announcing plans for a new "clearing house", backed by £200m of government money, to help housing associations snap up properties which developers cannot sell privately.