There was little joy in today’s release of the Council of Mortgage Lenders March figures for lending, as they reinforced data pointing to a weakening housing market.

Lending was up 5% on February, but the normal 20% March jump was absent with the figure 17% down on a year ago. Worse still is the likelihood that when the more detailed figures are released (splitting loans between house purchase, remortgage and other) they will show that lending for house purchases extremely muted.

The shape of the curve from the 12-month moving average for gross lending shows quite clearly that from the beginning of the credit crunch there has been a steady decline in lending. The peak in gross lending was in October last year and has since dropped by about 4%. Lending for house purchases peaked in August and has fallen more than 10% since.

Mortgage lending is a leading indicator of housing activity, as David Miles and Melanie Baker Morgan Stanley’s Global Economic Forum Team point out in an April 24 note on UK Banks & Economics.

The central case view they present is that there will be a 30% fall in housing transactions and a 10% fall in nominal house prices this year. The prospects for next year are that house prices will fall a further 4% fall in nominal terms, meaning that over the two years there would be a 20% real correction in house prices.