LONDON (Reuters) - House prices fell a larger-than-expected 2.4 percent in May, the country's biggest mortgage lender says, providing further evidence the property market downturn is gathering pace.

"The latest data on the housing market are undeniably alarming," said Howard Archer, an economist at Global Insight.

"Clearly, the downward pressure on house prices coming from stretched buyer affordability and tight lending conditions is now biting hard."

Analysts polled by Reuters had expected only a 1.3 percent monthly decline.

Sterling fell against the dollar and the euro after the figures, which come the same day the Bank of England will conclude its monthly monetary policy meeting. Analysts expect the Bank to leave interest rates unchanged at 5 percent.

Prices in the three months to May were 3.8 percent lower than a year ago, according to HBOS's Halifax house price index, the steepest fall on that measure since 1993.

Figures from rival lender Nationwide last week were equally weak, showing house prices fell 2.5 percent in May, the sharpest monthly fall since its survey began in 1991.

Halifax said the average cost of a house in May was 184,111 pounds, 6.4 percent lower than in the same month last year. The Halifax index shows house prices have fallen 7.8 percent from their peak in August 2007.