The trade body says that the sharp decline in lending is likely to have been down to the stampede of first-time buyers who brought forward their transactions in March to beat the end of the Stamp Duty holiday for properties under £250,000.
It also points out that the £10.2bn in gross lending was still 2% higher than the £10bn completed in April last year. Mortgage lending activity has also been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture.
Bob Pannell, chief economist at CML, says: “The underlying picture is likely to be a bit stronger than the April figure suggests, because some first-time buyers are likely to have brought forward their transactions to March to take advantage of the stamp duty concession that was coming to an end.
“Eurozone developments are highly uncertain and have the potential to undermine UK economic prospects and conditions in our housing and mortgage markets. The underlying picture is likely to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad eurozone news.”
Duncan Kreeger, chairman of specialist lender West One Loans, says if the eurozone crisis takes another turn for the worse then mortgage lending to first-time buyers could enter a state of near paralysis.
He says: “There is a big funding gap between supply and demand. Underlying borrower demand is actually very healthy, but banks and building societies don’t have the capacity to meet it. Not by a long shot. Net mortgage lending is 90% lower than it was pre-2008, and borrowers have to cross a painfully high threshold to get high loan-to-value mortgages.”