Mortgage lending at lowest level since 1975 » Bill payments » 24dash.com

Mortgage lending for house purchases fell to its lowest level for more than three decades in the first three months of the year, figures revealed today.

The Council of Mortgage Lenders (CML) said the number of loans for house purchases plunged to 142,000 between January and the end of March - the lowest on record since the first quarter of 1975.

The data also showed lending to first-time buyers and home movers nearly halved year-on-year in March, to 46,500, down 1% since February and 48% on the 89,000 seen last March.

The figures add to the gloom in the housing market, with the Royal Institution of Chartered Surveyors (RICS) also today painting a grim picture for UK property, with news that surveyors are nearly unanimous in seeing price falls amid a transaction stalemate between buyers and sellers.

The credit crunch is affecting borrower access to loans, but both RICS and the CML warn that there is a growing gap between buyer and seller expectations on price, which is leading to a collapse in the number of housing transactions.

The CML forecast that the dire house purchase lending figures are set to get worse as transactions continue to decline.

First-time buyer loans saw a 1% drop on February to 17,900 in March, or down 45% year-on-year, according to today's CML data.

Total mortgage advances were also revised down to £24.1 billion for March from the previous estimate of £26.3 billion - now less than 5% up on the previous month and a fraction of the usual 20% hike seen between February and March.

But the CML reported remortgaging activity remained resilient, increasing in the first quarter to £33.3 billion, which accounted for 44% of gross lending and its highest level for three years as borrowers came off two and three-year fixed rate mortgages.

The clampdown on lending also saw loans to value - the mortgage advance as a proportion of the total purchase price - remain depressed, with first time buyers borrowing 89% of the property's value in March, down from 90% in March 2007.

The CML said the Bank of England's recent £50 billion intervention to help the mortgage market had begun to see wholesale lending costs come down marginally, with the London Interbank Offered Rate (Libor) at 5.76% yesterday against more than 6% in April.

But it added this was yet to filter through to borrowers.

Michael Coogan, CML director general, said: "House purchase transaction volumes will continue to deteriorate in the coming months.

"Since the introduction of the Bank's Special Liquidity Scheme, there has been a slight improvement in credit market conditions with Libor moving in a more helpful direction. But Libor still remains high relative to the Bank base rate and any improvement in credit market conditions will take time to feed through into the mortgage market."