According to the CML, turbulence in the financial markets continues to take its toll on the mortgage sector. The number of mortgages taken out in January was down 19 per cent to 50,300 compared with 62,000 in December, and down 34 per cent compared with January 2007.

In terms of value, January home loans fell 17 per cent to £7.8 billion compared with £9.4 billion in December and 31 per cent compared with £11.2 billion in January 2007.

“The wholesale funding markets remain largely closed and mortgage funding still remains constrained. This is now having a discernible impact on lending criteria and the ability of first-time buyers to get into the housing market,” says director general, Michael Coogan.

Meanwhile, RICS’ research could spell good news for the future of the housing market. It found that the balance of chartered surveyors who reported house prices falls in February increased to almost historical levels, while stock piles increased to levels that have not been reached for 10 years.

It showed that the house price balance fell for the seventh consecutive month, with 64.1 per cent more surveyors reporting a decline than a rise in house prices in February, up from 54.7 per cent in January. This figure is close to the historical low of June 1990 when 64.5 per cent more surveyors reported a fall in house prices.

RICS also reported a continued decline in new buyer enquiries, with 37 per cent more surveyors reporting a fall than a rise, down from 35 per cent in January. Meanwhile, the stock of unsold property on surveyors’ books rose more than 8.5 per cent in February, the fifth monthly increase of more than eight per cent in a row.

Spokesman, Ian Perry, comments: “Confidence in the market is clearly having an effect on prices. A combination of a lack of available finance and weakening demand is causing a slow drop in capital values.

“While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build-up of unsold stocks will encourage buyers to negotiate lower asking prices.”

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