According to Nationwide mortgages’ latest housing figures, the average house price lost £2,755 in February falling from £150,501 in January to £147,746.

But, says Fionnuala Earley, Nationwide’s chief economist, the fall, combined with cuts in the Bank of England base rate, means existing borrowers are enjoying lower repayments and although the mortgage market has not felt the affects yet, first time buyers should soon see an increase in affordability.

“For existing borrowers on variable rates with a typical loan size, the reduction in interest rates since 2007 has led to a significant reduction in mortgage payments,” she said.

“About one third of the overall stock of mortgages is on a base-rate tracker mortgage. For these borrowers, the 4.5 percentage point fall in rates seen since the end of 2007 means that their monthly mortgage payments have fallen by around £240 per month.

“Those on standard variable rates have seen a fall of a similar amount.”

Ms Earley says that while existing variable rate borrowers have benefitted from the cut in rates almost immediately, first time buyers will have seen both lower mortgage rates and lower house prices, which should soon start to have a positive affect.

“A typical first time buyer at the end of 2007 would have paid about £150,000 for a property, borrowed about 90 per cent of the value and paid an interest rate of around six per cent, depending on the type of loan chosen. The monthly outgoing would have been about £915.

“However today, the reduction in house prices and mortgage rates means that outgoing would be around £530, if the buyer qualified for one of the best tracker deals of 3.99 per cent.”

“While lower interest rates alone will not lead the housing market to suddenly pick up, more affordable loans will provide support for both new and existing borrowers in the weak economic environment.

“It is too early to say that the market has reached its trough, given the economic recession, however, falling house prices and interest rates have made the situation for borrowers today much easier than it might have been.”

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