As most people are already well aware mortgage conditions and credit conditions in general have become increasingly tough since the onset of the global credit crunch in the latter part of 2007.

In addition, we have financial institutions facing a drying up of funds many have become increasingly wary about who they will lend to, and have really scaled back on their lending as well as reducing their risks by leaving less credit-worthy customers out in the cold.

The mortgage market is one of the areas of finance that has suffered considerably, with mortgage lending levels down by around 43 percent compared to last year and with the number of mortgage products on the market having tumbled dramatically. In addition to this, mortgage lending criteria has been tightened over the past year, and many have found themselves unable to get their hands on an affordable mortgage loan.

Lenders are demanding higher deposits from borrowers for their most competitive deals, and certain groups such as lower income households, first time buyers, and those with little equity left in their homes due to tumbling house prices have found that getting a good mortgage deal is nothing short of an uphill struggle at best.

However, despite the base interest rate falling to a record low of 1 percent this month, and the government taking a range of measures to try and boost mortgage lending to aid both the financial and the housing sectors, a recent report has indicated that mortgage conditions have continued to get tougher this year. It was shown that around 64 percent of all mortgages now require a deposit of at least 25 percent of the property value. This can amount to a huge sum of money, which is often unavailable to those with little equity, no savings, and first time buyers.

In the past, before the credit crunch took a hold, consumers were able to get a mortgage loan with relative ease, and could enjoy the luxury of great choice, including the traditional 95 percent mortgage, 100 percent mortgages, and even 125 percent mortgages. However, these days lenders have taken 100 and 125 percent mortgages off the shelves, many have stopped offering 95 percent mortgages, and fewer and fewer are entertaining the idea of lending to those with only a 10 percent deposit to put down, particularly given the ongoing falls in house prices.

Since the start of the global credit crunch mortgage deals that are still on the shelves have shrunk by nearly 90 percent according to some industry officials. Moreover, whilst lenders have started offering more competitive mortgage rates due to plunging interest rates, these are only being made available to those that have deposits of around 40 percent of the property value.

One official stated: “There are only three fixed 95% deals left on the market, which are available direct from Abbey, Yorkshire Bank and Clydesdale Bank, however with rates at over 7% borrowers would really be paying a premium for having such a small deposit.”

Of course, this increasing stringency over mortgage conditions is certain to have a continued knock on effect on the housing market, with sales already having dried up last year, putting many estate agents out of business and resulting in homes festering on the market because people simply cannot get the mortgage finance to buy despite falling house prices.

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