The Council of Mortgage Lenders said yesterday that it expects gross mortgage lending for the current year to fall by 21% to £285bn compared with 2007.

The Council of Mortgage Lenders said yesterday that it expects gross mortgage lending for the current year to fall by 21% to £285bn compared with 2007.

Gross mortgage lending for April 2008 came in at an estimated £25.3bn, a 5% increase from March but an 8% drop from April of last year.

The CML, whose members are banks, building societies and other lenders that provide residential mortgages, predicted that house prices across Britain would plunge by 7% by the end of the year.

The CML did not provide figures for Scotland but Scottish estate agents and lenders said the housing market north of the border is generally more buoyant than that in England and Wales.

The council also said it expects the Bank of England to lower base rates to 4.75%. The cost of borrowing in the UK now stands at 5%.

The CML said property transactions south of the border would be 35% below the 2007 figure at 770,000.

The lenders' organisation said there were some crumbs of comfort for the market, despite expectations of a sharp slowdown this year.

It said its outlook for mortgage arrears and repossessions remained unchanged, which it said reflected the fact that many borrowers coming off fixed rates on to higher rates appeared so far to have managed the adjustment well.

CML director-general Michael Coogan said the forecasts also assumed that actions taken by the Bank of England to improve liquidity would begin to have an effect in the mortgage market in the later part of the year.

He added: "Over the next few months, lending volumes will get worse before they get better. The market is still very uncertain."