Gross mortgage lending reached an estimated £14.6 billion in November according to the Council of Mortgage Lenders (CML). This is a 22% fall from October and a 51% fall from November last year.

While there is typically a decline from October to November, this is considerably larger than usual reflecting the market disruption and continued deterioration of confidence in the economy.

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CML Director General Michael Coogan said: "In looking ahead to the coming year, the housing market will remain extremely subdued and net mortgage lending is likely to turn negative. Repayment problems will worsen against the backdrop of rising unemployment but lenders and government are working to try to reduce the negative impact on borrowers.

"Recent glimmers of light in terms of government intervention to improve conditions to support new lending are helpful, but more will be needed. 2009 will be a challenging year, but borrowers who remain in employment will see some benefits in the form of lower mortgage rates."

(CD/JM)