A decline in mortgage lending might sound a poor result, but a modest fall at this time of year when the housing market is seasonally slowing down, is seen as a sign the market is in good form.

Gross mortgage lending fell by 3% in October to an estimated £27 billion, according to the latest data from the Council of Mortgage Lenders.

Although this is down from the £27.7 billion of lending in September, it is still one of the highest monthly lending figures on record, and 16% higher than the £23.2 billion of lending in the same month last year.

While we would normally expect lending activity to slow down at this time of year, said the CML, the modest decline in October lending suggests the market is in good form. Figures due to be released by the Bank of England later this month will probably show that lending on a seasonally adjusted basis is close to the peak levels of two years ago.

The resilience of mortgage lending reflects the progressive recovery in housing transactions over the past year, and continuing high levels of remortgaging as people take advantage of attractive rates and switch to cheaper deals.

Commenting on today's figures, CML Director General Michael Coogan said: "The resilience of lending activity in recent months contrasts sharply with the ongoing uncertainty about household finances and consumer confidence. We believe that gross mortgage advances for 2005 will reach around £280 billion - similar to the levels seen in 2003 and 2004."

"The decision by the Bank of England's Monetary Policy Committee to hold interest rates steady in November was widely expected, and fits with market expectations that they will remain broadly flat in 2006. In this environment, we believe the housing market will stabilise around current levels."