Gross mortgage lending has fallen 17% since March last year to £26.3bn, according to figures from the Council of Mortgage Lenders (CML).
CML estimates gross lending for the first quarter of 2008 fell 8% to £77.2bn on the same quarter last year and predicts levels will worsen over the next few months.
The council typically expects a 20% rise between February and March as people have rushed to buy houses in spring for decades but this year lending only rose 5% to £26.3bn.
Michael Coogan, director general of CML, says: “We await the eagerly anticipated announcement of further action by the Bank of England to respond to these rapidly worsening market conditions.
"Early action is needed if we are to be able to maintain a market in which UK borrowers continue to be able to access mortgage funds at reasonable prices.
“As mortgage costs increase, it remains important for any borrower with potential financial difficulties to speak to their lender as soon as possible, and preferably before they have missed a payment.”
The figures follow news that Rooftop Mortgages, US investment bank Bear Stearns’ specialist lender, will close at five o’clock this afternoon after struggling to cope in a disintegrating market.
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