The credit crunch and property downturn will lead to fewer loans being advanced in 2008, the data firm has said.
Overall levels of mortgage lending will fall by 19.3 percent from 2007 to 2008, new figures from Datamonitor have shown.
According to financial analysts at the firm, the credit crunch and a tailing-off of consumer interest in selling or buying homes is the cause of the lending shortfall. Overall, Datamonitor expects £294 billion to be lent over the course of the year.
The new research chimes with previous figures from lenders, which have shown that total mortgage issuance has fallen by 50 percent since the onset of the crunch. Home sales are particularly slow, with just 30 percent of mortgages being used for buying a new property, rather than for remortgaging.
Moreover, the housing downturn - which has already wiped off around eight percent from the value of UK homes - is expected to dampen demand significantly as long as it continues. This is due in part to consumer fears over negative equity, which occurs when the value of a mortgage exceeds that of the home it was borrowed against.
Commenting on the new analysis, Karina Purang at Datamonitor said: "The consumer lending market has moved beyond recognition."
She added: "Lending markets are currently beset by high market uncertainties with the ongoing credit crunch, falling house prices, rising arrears and repossessions, and indebted consumers struggling to find credit."
