Half a million households to miss payments

Net new lending on mortgages is set to fall for the first time in recorded history next year, the Council of Mortgage Lenders has warned. Net new lending in 2009 will be negative £25bn, down from £45bn in 2008.

Meanwhile, the number of repossessions is expected to rocket. The CML said it would be “a very tough year” for the housing market. Repossessions would stand at 75,000 and the number of households expected to be in arrears would more than double to 500,000.

The CML was bearish about the action taken by the government to spare the economy from recession. Recovery would begin by the second half of next year, at the earliest.

"The housing market has borne the brunt of these difficulties and is going through a difficult adjustment process,” said the CML. “The process is likely to be extended by a weak economic backdrop and the lack of available finance. We envisage housing market activity remaining extremely subdued, with around 700,000 housing transactions in 2009, down from around 900,000