Home Information Packs (HIPs) have been cited by the CML as a possible trigger for the slump which saw purchase loans fall back to 62,000.
Less pressurised financial conditions should mitigate against payment shock though, allowing borrowers to claw back some stability, with easing affordability allowing them to get a better grip on their finances.
Unsurprisingly, first-time buyers are having a tough time keeping up as more and more of their monthly income is eaten up by mortgage repayments.
In December 2006 the average first-timer put aside 17.9 per cent of their monthly income to pay off their mortgage, 2.8 per cent less than the 20.7 paid in December 2007. By contrast, income only increased by 0.04 per cent over the same period.
The only solution for almost three-quarters is seen to be fixing their monthly payments, even though rates are beginning to sink and demand for fixes drops off.
“The decline in lending appears to be driven more by funding constraints than lower consumer demand," said CML director general Michael Coogan.
“Affordability has been stretched further in 2007 but the recent base rate cuts and the expectation of future cuts will ease debt servicing burdens in 2008.
“For first-time buyers, the combination of subdued house price inflation and lower mortgage rates means affordability should ease slowly as the year progresses.”
