Further action is needed from the government to incentivise new lending, one sector commentator has claimed.
A spokesperson for The Council of Mortgage Lenders said that she believed market conditions would be "worse" in 2009.
She added that a major issue was shortage of funding and that the group was looking at trying to restore this to the mortgage sector.
"It's a complicated situation and different lenders are facing different sets of circumstances and challenges. I think they are doing all they can," the representative explained.
She noted that the banks were playing a big part in solving the problem and that although it varied for different lenders, they were trying to manage their businesses and maintain their capital ratios.
The Council of Mortgage Lenders anticipates gross mortgage lending of around £145 billion next year, down from around £258 billion this year and £363 billion in 2007.
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