Gross mortgage lending fell to its lowest level for nearly 10 years in January, according to the Council of Mortgage Lenders.
The figures show that lending fell by 32 per cent from £13.4bn in December 2009 to £9.1bn in January this year.
The CML says the drop was due to borrowers rushing to complete property purchases before the end of the stamp duty holiday at the end of last year, when the threshold came back down from £175,000 to £125,000.
It is forecasting that repossessions will rise to 53,000 this year from 46,000 last year and that the pattern will be a bulge lasting for several years rather than a oneoff spike.
Economist Paul Samter says: “We remain in a period of uncertainty for the housing market and economy at large. The market certainly improved over the second half of last year and started 2010 in better shape than most would have predicted 12 months ago.
“More recent developments have been influenced by the end of the stamp duty holiday and are likely to foreshadow a bigger than usual seasonal drop-off in activity n the early part of this year.
“However, the Bank of England is likely to keep rates low which should continue to mitigate mortgage payment problems and help cushion borrowers from the worst of the recession.”
London & Country head of communications David Hollingworth says: “What you have got to face up to is that while there is a lot more positive stuff to talk about, we are still in a tough market. We cannot expect to see a huge increase in the levels of gross lending this year.”