The UK ‘mortgage squeeze’ is having a serious impact on first time buyers…

Figures from the Council of Mortgage Lenders (CML) show that new loans for home buyers fell to 50,300 in January - the lowest level for nine years. That was 11,700 fewer than in December and 25,500 fewer than in January 2007.

The CML's Director General Michael Coogan said: “Lenders' tougher loan criteria are forcing borrowers to put down larger deposits and accept smaller mortgage offers than before.

"The wholesale funding markets remain largely closed and mortgage funding still remains constrained. This is now having a discernible impact on lending criteria and the ability of first-time buyers to get into the housing market,"

Hostile environment

Simon Rubinsohn, RICS chief economist said: The CML data provides clear evidence that the credit crunch is now having a meaningful impact on the availability of finance for home purchases.

This ties in neatly with the results of the latest RICS survey which showed new buyer enquiries continuing to slide. Not only is the volume of mortgages falling sharply but loan to value ratios are also being reduced. This is consistent with much other anecdotal evidence.

"First time buyers are very much under the cosh in this more hostile environment. While any increase in the stamp duty threshold in tomorrow's Budget would provide borrowers trying to take their steps on the housing ladder with some assistance, the scaling back of lending activity is likely to limit the extent of any benefit. In the near term, the housing market is likely to continue to soften."