Gross mortgage lending has fallen by 8% over the past year, according to the latest figures from the Council of Mortgage Lenders (CML).
The CML has also updated its forecast for the housing market, and now believes house prices will fall by 7% over the course of 2008.
Overall, gross lending reached £25.3bn in April, up 5% since March, but combined April and March figures are down 16% compared with 2007.
The CML says gross lending is likely to fall by around 21% during 2008, to £285bn, while net lending will be cut in half at just £55bn.
Commenting on the figures, Michael Coogan, director general of the CML, says: “Over the next few months, lending volumes will get worse before they get better.
“The market is still very uncertain, but lenders are working hard to ensure that borrowers coming off fixed rates remain on track, that arrears and repossessions are minimised, and that pricing is as attractive as they can make it in a market where they must manage the demand for lending with caution.”
The CML’s revised figure for the housing market, down 7% over the year, mirrors similar moves by Nationwide and the Halifax, who also downgraded their forecasts.
In addition to falling prices, the CML now believes that property transactions in England and Wales will fall by 35% to around 770,000, while the bank base rate will fall to 4.75%.
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