According to the Council of Mortgage Lenders (CML), remortgaging accounted for 42% of mortgage lending in April and has continued to perform better than house purchase as large numbers of borrowers exit fixed-rate mortgages.
CML director general, Michael Coogan commented: "Monthly house purchase lending volumes continue to be lower than last year and there will be a further weakening in coming months as recent mortgage approvals data has shown. "There has been a resurgence of fixed-rate lending as borrowers are seeking certainty. This trend is likely to continue as the anticipation of future Bank base rate cuts has diminished."
More downbeat news came from Halifax this week as they predicted house prices to fall by 9% this year. The (HBoS) group also revealed a slight increase in the number of mortgages in arrears at 1.89%, although it stressed the figures were in line with expectations.
The lender described its trading performance over the last six months as 'resilient'.
The Royal Institute of Chartered Surveyors (RICS) market survey for May gave further evidence of the slowdown as they reported the average number of transactions per suryeyor fell to 17.4, the lowest point since 1978, and over 92% of surveyors reporting falling prices.
The survey also said the lack of new instructions to sell property continued to provide the market with some support in the near term. Large numbers of distress sales (either repossessions or sales from those attempting to avoid the repossession process) had not taken place and this lack of supply will prevent significant declines in house prices.
Commenting, RICS spokesperson Jeremy Leaf said: "While demand remains weak and housing transactions continue to evaporate, there is a very real danger to the wider economy. The property industry will not be the only casualty in the fall out from the credit crunch, with the high street and purveyors of a range of household goods, including furniture and white goods also feeling the pinch. Construction workers such as plumbers and bricklayers will start to see employment opportunities dry up as the pace of housing transactions continues to abate."