According to the Council of Mortgage Lenders (CML), the number of loans lent on properties costing between £125,000 and £250,000 fell by 70 per cent in April compared to the previous month.

Economists said that the fall demonstrates just how precarious the property market is and predicted that house prices will fall this year.

The Government had exempted properties priced between £125,000 and £250,000 from the 1 per cent sales tax in an effort to boost sales at the bottom end of the housing market. The stamp duty holiday, which ran from 2010 to March 31 this year, saved the average buyer around £1,800.

The CML said that the number of mortgages lent specifically to first-time buyers between March and April dropped by 48 per cent in April due to the policy ending.

Total mortgage lending in April fell by over £2 billion to £5.3 billion compared to the previous month.