In the last quarter of 2012, 174, 599 mortgages were agreed - 25.7 percent less than in the same quarter a year earlier.
The number of mortgages handed out has more than halved since 2006, the year before the global financial crisis took hold with the crash of Lehman Brothers.
Meanwhile, property transactions fell by 25.8 percent in 2012, according to recent figures by Eurostat.
House prices in Italy continue on a downward spiral after falling 4.64 percent in 2012, Eurostat said.
Prices slumped 8.6 per cent between 2008 and 2011. This followed a dramatic surge of 85 percent between 2000 and the first half of 2008