The Council of Mortgage Lenders gave the gravest warning yet of the threat hanging over the mortgage industry when it said lending could halve this year unless fresh liquidity were injected into the market.

New funds are hard to come by for the thousands of borrowers coming to the end of cheap mortgage deals. Lenders continue to withdraw their best rates and load higher premiums on to larger loans. The number of available mortgage offers has fallen 20 per cent this month and 46 per cent since the start of March, according to Moneyfacts.co.uk.