THE number of people buying a home has fallen to its lowest level since 1974 because of the mortgage shortage.
Figures released yesterday by the Council of Mortgage Lenders (CML) showed that only 516,000 mortgages were taken out last year – 49 per cent down on 2007.
First-time buyers were particularly hard hit by the problems in the mortgage market, with o
nly 194,200 people getting a foot on the property ladder during the year, again the lowest since the CML began collecting data nearly 35 years ago.
People who were able to buy their first home had to put down a record average deposit of 22 per cent of the property's value, as lenders cut the loan-to-value ratios they were willing to advance.
People remortgaging were also hit by the credit crunch, with 18 per cent fewer people switching to a new deal when their current loan came to an end. The fall is likely to be the result of a combination of low standard variable rates – the rate most borrowers revert to after their existing deals come to an end – and tighter lending criteria, giving people little choice but to stay where they were.
Overall, net lending for 2008, which strips out redemptions and repayments, slumped to £39.7 billion, from £108.2 billion in 2007.
Andrew Montlake, of the mortgage broker Cobalt Capital, said: "The data crystallises what we already knew, namely that, from a mortgage perspective, 2008 was a massacre. The entire market is barely recognisable from what it was two years ago."
