House prices fell for a sixth consecutive month in April and are now lower than they were a year ago – the first annual decline in 12 years – Nationwide said on Wednesday.

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The lender said its index of house prices fell 1.1 per cent in April, more than expected, taking the annual change from growth of 1.1 per cent in March to a decline of 1 per cent. Analysts had forecast prices would be flat year on year.

Nationwide said it was the first year-on-year fall in prices since March 1996. Its index is showing a similar trend to that of the rival Halifax index, and follows Bank of England data showing mortgage approvals for house purchase numbered just 64,000 in March, the lowest since the early 1990s.

Consumer confidence is also at the lowest ebb since the early 1990s, according to the index published by the research group GfK NOP, which fell from -19 in March to -24 in April. People had become much more pessimistic about the general economic outlook, although they were less dispirited about their personal finances.

The data may reignite speculation about further rate cuts, even though the Bank of England’s chief economist has said he is “sanguine” about the implications of any fall in house prices for consumer spending.

“These releases further underline the clear, and mutually reinforcing, weakness in the housing and consumer sectors,” said Richard McGuire, strategist at RBC Capital Markets, adding that more weak data would “bolster speculation that for all its tough talk the Bank will need to pick up the rate cutting pace heading into the second half of this year.”

Fionnuala Earley, Nationwide’s chief economist, said the latest drop in prices followed the steep decline in house purchases resulting from “falling demand from first time buyers, higher mortgage rates and tighter lending criteria”.

However, she also played down fears that a high proportion of mortgage holders could be hit with higher borrowing costs as lenders continued tightening criteria.

“Those borrowers who will be most affected by higher rates are those whose deals are set to expire,” she said, citing a Council of Mortgage Lenders estimate that 1.4 million borrowers would come of fixed rate deals this year, and adding that a further 400,000 would come to the end of tracker or discount deals.

The total number of deals expiring in 2008 represented around 15 per cent of outstanding mortgages, she said. The remaining 85 per cent would be unaffected or would benefit from Bank of England rate cuts, if they held variable rate products linked directly to official interest rates.

Nationwide said the price of a typical house was £178,555, compared with £180,314 in April 2007.

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