First-time buyers put down an average deposit of 12 per cent in January, increasing from 10 per cent in December 2007, while home movers took out a typical loan to cover 70 per cent of their new home's value - slipping from 73 per cent in December.
Indeed affordability issues within the marketplace have sparked a sharp annual drop in lending, with the 50,300 loans for house purchases 34 per cent lower in January 2008 than than the 75,800 seen a year previously.
As predicted, remortgaging activity grew by 43 per cent between December 2007 and January 2008, however income multiples dropped off. The average remortgagor now borrows an amount 2.97 times their income, slipping from 3.04 in December.
Income multiples for first-time buyers, which had climbed to as much as 4.5 times income before the credit crunch hit, have also slipped back. The average first-time buyer now borrows 3.32 times their income, down from 3.38 in December.
CML director general, Michael Coogan, said: “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.
“Wednesday’s Budget presents a perfect opportunity for the government to do what it can to help first-time buyers by raising the stamp duty threshold.
“While we don’t believe there is one silver bullet solution to problems in the wholesale funding markets, we welcome the Treasury’s recognition of the problem and willingness to work with the industry. However, we are unconvinced that a new kitemark 'gold standard' for mortgage securities is the solution, or that consumers will move to longer term fixed-rate mortgages without financial incentives."
