Highlighting the sheer extent of the current slump, the Council's latest lending data revealed that the number of loans for house purchases has been more than 30 per cent lower than a year ago for the last three months. They have now sunk below the 50,000 barrier, amounting to only 49,000 in February.
Overall lending remained subdued, totalling £25 billion gross in February - a 3.5 per cent reduction since January 2008 and 2.3 per cent lower than February 2007.
Remortgaging accounted for almost half (45 per cent) of all lending in the same month, unchanged from January's figures.
"We expect this process of further tightening in lending criteria to continue in the second quarter as lenders respond to the challenging market conditions," explained CML director general Michael Coogan.
“Individual lenders are having to balance consumer demand with service considerations, as many of those active in the market are seeing higher levels of applications than they can deal with in the wake of the overall tightening in supply of funding to the market."
Tracker popularity has grown, with the proportion of borrowers choosing tracker rates increasing to 35 per cent in the lead up to what they hope will be another Base Rate cut on Thursday, however fixed rates still dominate the market with a 52 per cent share.
The CML highlighted that floating rate products had become increasingly attractive compared with fixed rates due to consumer expectation that the Bank will lower rates further in the coming months.
Coogan added: "While lower short-term interest rates help a little, we continue to urge the Bank of England to use more broad-based and flexible measures to increase liquidity levels in the UK market so that firms have sufficient funding available to match consumer borrowing demand in 2008."
