The Council of Mortgage Lenders (CML) has revealed lending totalled £256.4bn over 2008 as a whole, down 30% on the £363.7bn lent in 2007 and the lowest annual figure since 2002.
The trade body added that approval figures from the Bank of England suggested lending would decline further in the coming months, so improvements in lending are unlikely to be seen in completion levels until the second half of 2009 at the earliest.
Michael Coogan, director general of the CML, says December is typically a quiet month, on top of which the market remains constrained by a shortage of funding.
He continues: "A mortgage market solely funded by a few large banks and building societies would be unlikely to have the capacity to match future consumer borrowing demand, or be as competitive in the long term as the UK market has been before the credit crunch. Increasing the range of active lenders and funding capacity in the market overall is a vital next step.
"Further measures targeted at the housing market are likely to be needed to supplement yesterday's welcome intervention to address liquidity and capital concerns."IFAonline
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From 1 March