Mortgage advances in the UK sunk to their lowest level for a decade during 2010 as the lending drought intensified.

A total of just £136.3 billion was lent during the year, the lowest level since 2000, and five per cent below 2009’s figure, which was the lowest total for nine years, according to the Council of Mortgage Lenders.

The group, which is predicting total advances of around £135 billion for 2011, warned that consumer demand could be even weaker than previously expected if inflationary pressures led to an early rise in interest rates.

Advances during the final month of the year were also low, with just £11 billion lent in December, the most subdued figure for the month since 2000, and six per cent down on November’s total.

It was also the fourth consecutive month during which lending levels had been the lowest for the month in question for a decade.

But while December is traditionally a quiet month for the mortgage market, there were few signs that lending levels would pick up during January.

The Bank of England’s Trends in Lending report showed that the number of mortgages approved for house purchase by the major lenders had dropped to just 40,000 during the month, the lowest level since March 2009 and down from 45,000 in November.

The number of homes changing hands also fell during December, with just 75,000 properties sold for more than £40,000, down from 77,000 in November, according to figures from HM Revenue & Customs.

Paul Sabbato, a director of broker First 4 Bridging, said: “The near-paralysis of the mortgage market continues. December is always a quiet month but this was a quieter December than usual.

“There’s no doubt that many people who may have been considering buying a couple of months ago have shelved their plans until there is more clarity on when, and by how much, rates will rise.”