Gross lending for the third quarter of 2012 was therefore an estimated £37.3bn, an 8% increase from the second quarter of this year (£34.5bn) but a 5% decrease from the third quarter of 2011 (£39.3bn).
CML chief economist Bob Pannell said: "There have been hints of demand softening over recent months, but monthly patterns may have been distorted by the Olympics. House purchase demand failed to lift significantly in the third quarter, despite much better mortgage availability. Remortgage activity continued to languish, in contrast to relatively strong levels a year ago."
Hugh Wade-Jones, director of Enness Private Clients, said: "It's a depressing double act - the housing market is still soporific and mortgage lending is going back into hibernation.
"Total lending in September fell to the lowest level since April's atrociously low numbers. Such underwhelming performance cannot be explained away by one-off mitigating factors like post-Olympic gloom.
"The fact is that demand is still weak and the industry's appetite to lend is patchy. Despite the Funding for Lending scheme increasing the availability of money, the high cost of underwriting loans is still forcing lenders to charge prohibitively high rates of interest to borrowers with small deposits. The one bright spot is that lending to first-time buyers, long seen as the key to driving the market forward, is rebounding well."
Ashley Brown, director of independent mortgage broker Moneysprite, there was a lag to this data and he expected to see stronger numbers in the months ahead.
And he added: "In October, there has definitely been a greater appetite among people to borrow. It's no longer purely the 60% loan to value borrowers who are benefitting. Rates are now coming down at 70%, 80% and 85% LTV. The 60% LTV market is saturated and lenders are having to look to higher loan to values to achieve a better margin.
"With rates at 90% LTV below 5% and at 95% LTV below 6%, price is no longer an obstacle. Demand and the ability to find deposits are now key."
