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The amount of mortgage lending last month is estimated by the Council of Mortgage Lenders to be £26.3bn, up by 5 per cent from £25bn in February, but down by 17 per cent from £31.7bn in March last year.

The Council of Mortgage Lenders reported an increase of around 20 per cent is typically expected between February and March.

Estimated gross lending for the first quarter of 2008 was £77.2bn, down 8 per cent from £83.9bn in the first quarter of 2007.

Michael Coogan, director general of the Council of Mortgage Lenders, said: "Lending on completed transactions is currently running at levels considerably lower than a year ago. However, the picture for mortgage approvals for new business and prospective lending levels in the next few months is worsening.

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

"As mortgage costs increase, it remains important for any borrower with potential financial difficulties to speak to their lender as soon as possible, and preferably before they have missed a payment."