New mortgage lending is at its lowest since the early 1970s
The number of new mortgages being approved for house purchase hit a new low in April, according to figures from the Bank of England.
Just 58,000 such mortgages were approved, the lowest since the Bank began reporting the figures in 1993.
That was 8% fewer than in March and nearly half the level of lending that was approved a year ago.
Mortgage lending is expected to slump this year because of the credit crunch and a shortage of finance to lend.
Both the number of loans approved, and the amount of money offered to borrowers, has now fallen for 12 months in a row.
Both the Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors have warned that property sales this year would fall by between 35% and 40%.
However the Bank's figures suggest that the drop in transactions may be even greater than that, unless the market picks up towards the end of the year.
Simon Rubinsohn, the chief economist at RICS, warned that this downturn would have a big knock-on effect on the wider economy.
"Lenders are continuing to tighten up on the conditions accompanying new loans making it hard for first-time buyers to take advantage of the modest fall in house prices seen over the part few months," he said.
"A collapse in transactions of this magnitude has major implications both for consumer spending and a wide range of ancillary industries," he added.
Planning applications for new houses are currently 27% lower than a year ago, according to recent figures from the National House Building Council.
And it is widely expected that house prices may fall by 10% or even more this year.
Last week the Nationwide, the UK's second biggest mortgage lender, said they were dropping at their fastest rate on record and were 4.4% lower than a year ago.
The current rate of decline recorded by the building society suggested prices would end the year with an annual fall of 13%.