Revival choked by banks' reluctance to lend, CML says

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The CML expects gross lending from banks and building societies this year to fall 5% on last year to £133 billion. Chief economist Bob Pannell warned that the first half of this year would be particularly tricky as a fast-fading economy and the eurozone crisis takes their toll. "The second half should be stronger," he added.

The warning took the gloss off the better news that the CML's latest figures showed December was the fifth month in a row mortgage loans had grown year-on-year. The council's figures showed £13.2 billion was lent in the month - up 12% on a year earlier which was, however, a particularly soft period for housing as sentiment waned because of Chancellor George Osborne's comprehensive spending review.

The CML hopes inflation pressure will ease this year, and that first-time buyer transactions will pick up before the present stamp-duty exemption for homes worth up to £250,000 expires at the end of March. Pannell added: "There is a glimmer of light ahead for households in that real incomes could stabilise and perhaps even start rising by the end of the year.

"But continuing eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call."