The CML said that ongoing uncertainty about the future of the British housing market was behind the fall, despite the last few weeks indicating a return to stability in UK mortgage lending. In October this year, gross mortgage lending stood at around Â£13.1 billion, some 4 per cent less than September’s two-year high of Â£13.7 billion. The good news is that year-on-year lending is up 13 per cent, significantly more than the Â£11.6 billion that was recorded last October. However, lending was up by 13 per cent year-on-year, a significant increase from Â£11.6 billion in October 2010. CML chief economist Bob Pannell commented: “The underlying picture in the housing and mortgage markets has not changed dramatically over recent weeks. The immediate direction of house purchase activity is a little unclear, although the story for remortgages, with strong year-on-year increases in activity this year, is for the time being more straightforward.” But IHS Global Insight chief UK and European economist Howard Archer said: “Mortgage lending is still very low compared to long-term norms and, with the economic environment looking decidedly worrisome, we believe that house prices are headed downwards over the coming months.” Noting that overall mortgage lending is still “substantially” below pre-recession levels at just Â£39.4 billion in the third quarter of this year, compared with Â£60.7 billion in the third quarter of 2008, Mr Archer said that his believes that property prices will have dropped by some 5 per cent by the middle of next year, and there could be further downward pressure if there’s a public spending squeeze and banks continue to restrict their lending.