Lending declined 19%, from £12.6bn in March to an estimated £10.2bn in April, but figures were marginally up from the £10bn recorded one year ago.
CML chief economist Bob Pannell said: “Mortgage lending activity has been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture.
“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.”
Martin Stewart, director of broker London Money, commented: “The sharp drop-off in April was certainly influenced by people bringing forward their purchases to benefit from the Stamp Duty holiday.
“But few could argue that the demand for property, already weak, has been dealt a further blow by the deterioration of the eurozone. With apocalyptic headlines every day, who wants to commit to a transaction as big as moving house?
“However, five-year fixes at around 4% are a fairly robust hedge against current eurozone volatility so it makes you think that a lack of equity, negative equity or the squeeze on income are still the real culprits.
“The move away from interest-only products is also impacting transaction levels. The irony is that there are some pretty exceptional two- and five-year fixed rates available at present, with the Nationwide, Woolwich and Coventry Building Society leading the pack.
Paul Hunt, managing director of Phoebus Software, added: “Despite entering recession in the UK and with the eurozone circling the plughole, lenders have still managed to increase their activity since this time last year.
“Even more impressive is that this has been achieved in a month where fiscal policy has created a hefty headwind in the form of stamp duty. These figures emphatically demonstrate the utter hubris of the government in suggesting the stamp duty holiday did nothing to boost the first-time buyer market.
“Last month it launched lending violently upwards and now we’ve seen the corresponding fall. The industry must hope now that first-timers will be able to jump this additional fiscal barrier and keep coming to market.
“While that’s by no means certain, lenders’ consistently positive attitude to making finance available wherever responsibly possible provides a strong cause for optimism.”
Duncan Kreeger, chairman of specialist lender West One Loans, said: “If the eurozone crisis takes another serious turn for the worse – as looks likely – then mortgage lending to first time buyers could enter a state of near-paralysis.
“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.”
