Mortgage lending down by 60 percent

Mortgage lending plummeted by over 60% during January to just one tenth of its level a year ago.

According to the Bank of England, net mortgage lending was £690 million during the month, compared with £1.79 billion in December, which has meat that mortgage lending has fallen by 60 percent in January, and is now running at 10 percent of its level 12 months ago.

It is the second lowest monthly total since formal records began in April 1993 and is a huge drop from the £6.91 billion lent in January 2008.

In a bid to improve the availability of mortgages, the government is using Northern Rock, the nationalised mortgage lender, to offer more loans for house purchase as well as the probability of reducing the benchmark interest rate to 0.5 percent.

Following the steep cut in interest rates, alongside the continued fall in house prices, potential buyers are now finding their way back to the market and as a result estate agents have reported an increase in interest, however this has yet to move into real sales.

However the stumbling block is that for most buyers especially first time buyers the problem is getting the high deposit that is needed to obtain a mortgage in the current climate.

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