The CML has found that mortgage lending criteria has continued to tighten in response to the worsening economy and falling house prices, bringing the typical first time buyer mortgage deposit in January up to 24 per cent – the largest amount on record.

According to Halifax, the average house price is now £160,327, so the fact that first time buyers now have to find almost a quarter of the value of the property they want to buy to get a mortgage means they are having to stump up £38,478 to get a foot on the housing ladder.

Mortgage lenders’ ever tightening criteria means that approvals are right down, with just 8,900 mortgages to first time buyers in January, down 27 per cent from 12,200 in December and less than half of the 18,000 figure of January 2008.

The number of mortgages for home owners was also down, falling from 20,200 in December to 14,500 – a decline of 28 per cent, and down 53 per cent from a year ago.

However, of those who did manage to secure mortgage finance, lower interest rates helped them obtain bigger loans – the average home mover borrowed £117,300 and spent 11.9 per cent of their income on mortgage payments – this is the lowest figure since March 2004.

The CML says although the figures are not overly positive, and potential home buyers asking why they are finding getting finance such a struggle, things will start to improve soon, as Michael Coogan, director general of the CML explains:

“People want to know why lenders are not lending. They are, but government schemes to restore the flow of funds are primarily focused on a few large banks and recent lending commitments by a few lenders cannot fill the gap overnight, although we hope to see more funds flowing into mortgage activity later in the year.

“Mortgage affordability is good for those borrowers with deposits, but consumer confidence and lender appetite will remain muted in the face of rising unemployment and falling house prices.”

© Fair Investment Company Ltd