The Council of Mortgage Lenders has called on the Bank of England to act to improve the amount of liquidity in the mortgage market as banks struggle to meet demand for loans.

The organisation revealed that gross mortgage lending fell by 7% in February to £24bn as banks restricted the amount of money they lent.

"We have entered a substantially slower phase in the housing market and there will be ongoing problems in the mortgage funding markets unless the Bank of England makes new, broader based attempts to improve levels of liquidity in the UK," said Michael Coogan, CML director general.

"Demand for mortgages remains strong but cannot be fully met from existing funding," he added.

According to a recent survey by Nationwide, house prices have fallen for the past four months while a similar poll by the Halifax suggested prices fell by 0.3% in February, taking the annual rate of house price inflation down from 4.5% to 4.2%.