Mortgage lending hit record levels in 2007 but December was the poorest month since May 2005

2007 was the strongest ever year for gross mortgage lending despite a late slump due to the credit crunch, according to figures from the Council of Mortgage Lenders (CML).

Over the year, lending reached an estimated £362bn, up 5% from £345bn in 2006 and above the CML’s forecast in October of £360bn.

But December was the poorest month since May 2005 - falling 21% from £28.6bn in 2006 to £22.6bn.

CML director general Michael Coogan said: “The credit crunch moved into its fourth month in December and continued to constrain the cost and availability of funds to lenders and, in turn, the cost and number of mortgage products available to borrowers.”

He said lending volumes would remain weak for several months despite the expected boost from the recent drop in the interbank lending rates and the prospect of further cuts to the base rate.