Bank of England set to inject £50bn into system in bid to ease mortgage meltdown

The BBC said the one-year bonds would be issued to fill the high street banks' gap in funding caused by the crisis in the mortgage-backed securities market in the wake of the sub-prime crash.

The bank's move comes as lenders warned yesterday that the mortgage meltdown is getting "rapidly worse", as evidence emerged of house prices falling by up to £1,000 a day.

The Council of Mortgage Lenders said mortgages could become dangerously expensive unless the Bank of England takes action.

Figures published yesterday by the council show how mortgage lending has plunged over the last 12 months.

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Mortgage fall: More than 75 per cent of deals available last summer have disappeared

Gross mortgage lending in March was £26.3billion, a 17 per cent fall on the same month last year.

At that time, about £1billion was being handed out every day by banks and building societies. Today, it has crumbled to around £850 million.

Mortgage lending usually jumps by 20 per cent between February and March. This year, it managed only a 5 per cent increase.

Director general Michael Coogan made a plea to the Bank of England for urgent help.

He said: "We await the eagerly anticipated announcement of further action by the Bank of England to respond to these rapidly worsening market conditions.

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"Early action is needed if we are to be able to maintain a market in which UK borrowers continue to be able to access mortgage funds at reasonable prices."

Around 75 per cent of the mortgage deals which were available last summer before the credit crunch struck have now disappeared.

Every day, dozens of deals are being pulled, mortgage rates are rising and lenders insist on big deposits before they hand over a penny.

Today there are just 3,939 mortgage deals to choose from, compared to a 15,599 last summer.

The mortgage crisis is having a devastating impact on the housing market with further evidence emerging yesterday of prices falling sharply.

Average asking prices in London have fallen 0.9 per cent this year, according to the property website Rightmove.

It is the biggest drop ever recorded in April by the firm, which measures nearly 140,000 asking prices, equal to about 90 per cent of the whole market.

One of the sharpest falls was in one of the most exclusive corners of the capital, the Royal Borough of Kensington and Chelsea.

In April, average asking prices plunged by £32,989 to an average of £1.46million, a fall of 2.2 per cent or more than £1,000 a day.

The biggest faller was Richmond-upon-Thames where asking prices dropped 2.7 per cent in a month, down £14,604 to an average of £535,249.