Despite the CML’s generous October prediction of £360 billion, the figures peaked higher at an estimated £362 billion, up five per cent from £345 billion in 2006.

However, as expected, December gross lending dipped to an estimated £22.6 billion, its lowest monthly figure since May 2005. It was down 25 per cent from £29.9 billion in November and 21 per cent from £28.6 billion in December 2006.

CML Director General Michael Coogan comments: “The ‘credit crunch’ moved into its fourth month in December and continued to constrain the cost and availability of funds to lenders and, in turn, the cost and number of mortgage products available to borrowers.

“Looking forward, the recent decline in interbank lending rates and the prospect of further reductions in base rates in 2008 should provide some help to the market, although lending volumes are likely to remain weak for the next few months.

Mr Coogan went on to say that despite the ‘funding constraints’ of the global credit crisis, it appears that the UK mortgage market remains resilient and ‘better risk’ borrowers will find that there will still be a number of highly competitive mortgage deals to be had.

The recent credit crunch has seen many homeowners coming off low fixed rate mortgage deals struck with higher repayments despite the Bank of England cutting the base rate from 5.75 per cent to 5.5 per cent on December 6.

However the next rate review by is due in early February when it is hoped that a further interest rate cut will help those struggling with inflated mortgage repayments.

© Fair Investment Company Ltd