As a result of the continued credit crunch, the trade body admitted that the introduction of Home Information Packs and the uncertainty over house price growth could lead to a marked downturn within the market.
The CML also confirmed that possessions were likely to increase to 45,000, but reiterated that this figure was well below the high of 75,000 experienced in the early 1990s.
A spokesperson for the CML, said: “2008 will be a challenging year for the mortgage market. While there are significant downside risks, there are reasons for optimism.
"It is possible that the worst of the problems for mortgage supply could be behind us by the middle of the year, and sentiment will stabilise and slowly start to improve as the year progresses.”
Mel Mitchley, director of industry relations at Callcredit, admitted that tightening market conditions meant that lenders would be forced to make hard decisions over the coming months.
She said: “There’s no doubt that providers are tightening up their lending criteria to ensure that they lower the risk of over-stretching consumers and consequently the chance of loans, credit cards or mortgages not being repaid – and they are doing this by making sure that their data is used in the most sophisticated and responsible manner possible. Assessing true affordability is increasingly critical.”
