Lenders are clamping down on mortgages with small deposits, according to new figures, which contributed to loans for home purchases reducing by 8% last month.
Chartered surveyors e.surv claimed in their latest Mortgage Monitor that in August a 10% year-on-year reduction was seen in lending to borrowers with a deposit of less than 15%.
This drove down the overall number of home purchase loans to 48,913, the third worst level recorded in the 20 years since records began.
Loans with deposits of less than 15% accounted for just 4,950 approvals last month, representing one in ten of all house purchase loans in August, compared to one in seven in January.
The slump will affect the whole spectrum of the housing market, from first-time buyers to those seeking a mortgage to purchase a retirement home.
Richard Sexton, business development director of e.surv, said: "Lending volumes - particularly to first-time buyers - are slipping back towards the dismal levels we last saw in 2010 and early 2011."
