October brought with it more chill than just a drop in temperature, according to the Council of Mortgage Lenders. The CML reported overall mortgage lending was down approximately 16% for the month. The number of mortgage approvals dropped to 46,000, while the overall value was down more than 10%. First-time buyers continue to get hit extra hard, falling about 20% since October of last year.

Eric Stoclet, Crown Mortgage Management, has a very bearish outlook on this winter season and into the 1st quarter of 2011. He believes the tight lending criteria “are becoming an albatross for the housing market”.

He added: “The new year looks set to usher in a prolonged winter–chill for the housing market as public sector cuts and a likely interest rate rise put a further squeeze on deposits.”

An important point not to be overlooked is the rush to finalize many mortgage approvals before the end of the stamp duty holiday. The CML emphasized that 2009 numbers were slightly inflated due to this effort.

Michael Coogan of the CML was not surprised by the figures. He discussed consumer confidence, saying: "Consumer confidence has also been affected by October's spending review, despite the relative affordability of monthly mortgage payments, and so a stable but small lending market will continue for some time."

Stoclet added: "We cannot expect cash buyers to continue to prop up the market. This drought in mortgage finance will force the Government to tread very carefully, as lenders have been restricted by their concern about the cost of repaying their bailout loans."