A "meaningful revival" in mortgage lending is unrealistic in the coming months as home loan values reach their lowest since April 2001, lenders say.
Mortgage lending fell by 8% in January compared with December, down to £12.4bn, according to data from the Council of Mortgage Lenders (CML).
This marked a 52% decline compared to the same month last year.
The CML said that the mortgage market remained "very weak", as home loans remained hard to obtain.
Typically, lending tends to dip slightly from December to January, but the CML said this showed the housing sector was still in a rut.
'No recovery'
"Mortgage lending activity continues to be very weak and while people are searching eagerly for some signs of recovery, it would be unrealistic to expect a meaningful revival in lending in coming months," said Bob Pannell, the CML's head of research.
 |  It is time for the government to get the gloves off and force the banks to lend  Mortgage broker Andrew Montlake |
Gross lending would be one of the later measures to show any lift in the market, he added.
Analysts said that banks remained reluctant to lend to potential homeowners although, with prices continuing to fall, many people are holding off from entering the market.
The figures led to renewed calls for the government to do more to encourage the banks to lend.
"The January lending figures are a joke. Enough is enough. It is time for the government to get the gloves off and force the banks to lend," said Andrew Montlake, partner at independent mortgage broker Cobalt Capital.
Falling rates
The Bank of England has cut interest rates to just 1% from 5% in October.
This has failed to revive buying and selling houses, despite mortgage costs dropping for many existing owners.
Lenders have increased the level of deposits they demand from borrowers, choking the supply of potential buyers.
The CML has warned that, owing primarily to job losses in a recession, more than 500,000 people were set to fall behind on mortgage repayments this year.
The group has urged people who found themselves in that situation to contact their lender as soon as possible, get some free independent advice, and not to simply send the keys back and walk away.
Homelessness charity Shelter and advice group Citizens Advice said that they were seeing more people with mortgage worries.
"As the credit crunch continues to bite, the reality is that more and more homeowners will struggle to keep up with their mortgage payments this year," said Adam Sampson, chief executive of Shelter.
"We are seeing increasing numbers of people coming to us for help with mortgage problems and we would urge anyone in difficulty not to bury their heads in the sand and to seek advice early to ensure they do not lose their homes."
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