This figure was also 58 percent lower than the same month last year, showing how steeply mortgage lending levels have fallen over the past twelve months.

The CML data also showed that although there had been an increase in lending to those looking to buy a home there had also been a sharp drop in lending for those that were looking to refinance their existing home mortgage loan with another provider.

However, on a brighter note there has been evidence from a number of leading lenders that the house price falls may now be slowing down and the market could be close to bottoming out.

One economist from the CML stated: “Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders’ limited access to funding will constrain activity for some time yet. Underneath the headline gross lending figure, it’s likely that a moderate improvement in house purchase lending in May has been offset by very low remortgaging volumes as borrowers stay with existing deals.”

The Bank of England also commented on the trend, stating: “The major UK lenders reported an increase in approvals for mortgages for house purchase in May. And there are some indications that mortgage availability has increased over the past month. However, lenders have highlighted a number of frictions that might delay the effect on completed housing market transactions and mortgage lending.”

The figures from the Bank of England have shown that around 1.1 million homeowners have now been plunged into negative equity as a result of the house price falls, and this is where the value of their home is actually lower than the amount that they owe on the property.

The quarterly bulletin from the central bank showed that between 7 and 11 percent of homeowners were now in negative equity, and in many cases these are buyers that purchased their homes over recent years when prices were near to their peak, as well as those that put down little or nothing by way of deposit over recent years.

The figures were on to show that around 200,000 buy to let mortgages had also gone into negative equity, where they were worth less than the amount of the loan that was used to pay for the property.

Because those that have been hardest hit by negative equity are the ones that purchased whilst prices were high and put down little or no deposit, it is mostly younger first time buyers that will have found themselves in this situation, according to industry experts.

Recently the Council of Mortgage Lenders estimated that around 900,000 homeowners were in negative equity but the Bank of England figures show that the actual number if significantly higher than this previous estimate.

Earlier this year the Financial Services Authority predicted that over the course of this year two and a half million households could be plunged into negative equity.

The mortgage was launched last year for a limited period and proved popular amongst homeowners that wanted to try and reduce their outgoings and benefit from the stability of having the rate locked in for a period of time.

However, whilst the mortgage did prove popular last time around it has been met with controversy from some industry professionals, who feel that many customers are being ripped off by being charged fees as high as £4699 for the privilege of being able to sign up to this mortgage deal. This is the fee that would be charged to someone taking out the maximum loan amount of £250,000 at a rate of 2.49 percent, which is the lowest rate that HSBC is now offering on this mortgage.

One mortgage broker said that consumers should always ensure that they look around before signing up to this or any other deal, otherwise they could end up paying way over the odds on the fees charged for such mortgages.

He said: “Whilst the flexibility to select a rate will hold plenty of appeal, the trade off is that the lower the rate selected the bigger the fee. Borrowers should therefore be sure to hold up any Rate Matcher offer against deals in the open market.”

The mortgage also comes with only a 75 percent loan to value ratio, which could make many people ineligible.

One expert said: “For some borrowers this deal will represent a significantly lower rate than the SVR their current lender is offering. However, the maximum loan-to-value ratio of 75 per cent severely limits the deal’s audience and for those with the equity, a hefty up front fee is likely to prove quite a deterrent..”

A recent survey has revealed that two thirds of would first time homeowners see too many things standing in their way of being able to get onto the property ladder, even though property prices have been falling over the past eighteen months.

With mortgage lenders putting stricter criteria into place and demanding more money from buyers, which is a huge obstacle for first time buyers with no previous property from which to take equity, 65 percent of would buyers have now decided that it will be impossible for them to get onto the property market at the current time, and this means that even though interest from first time buyers in the ailing housing market has increased the likelihood of this interest converting into sales is minimal.

An official from the National Federation of Property Professional stated: “With banks still refusing to lend and the Government doing practically nothing to help first-time buyers, it’s little wonder that so many people have given up hope of every owning their own home. First-time buyers are the bedrock of a healthy housing market.”

He also said that the chancellor, Alistair Darling, had failed first time buyers as a result of not scrapping Home Information Packs in the recent budget and failing to roll out the stamp duty exemption to the rest of the market.

Despite historically low base interest rates banks have seen sharp increases in profits on fixed rate mortgages. The base interest rate is now at just 0.5 percent, which is the lowest level in the history of the Bank of England. However, the average the average two year fixed rate deal stands at around 4.63 percent.

This has left many people hoping to get onto the property ladder whilst the base rate is so low unable to find a mortgage that they can afford the repayments on.

It has also caused difficulties for existing homeowners looking to remortgage to a cheaper deal whilst the base rate is low, as many find themselves facing repossession if they cannot find a cheaper deal that provides them with increased affordability. It is claimed that thousands of new customers and existing homeowners have been affected by this exploitation.

It has also been suggested that over the course of this year the gap between Libor rates and the rates that banks are charging customers have widened significantly.

One industry official said: “In the last few weeks, the differential has gradually crept up against a background of static Bank of England rate. This obviously shows lenders taking advantage of the low interest rate environment to boost profit at the expense of borrowers.”

One economist stated: “The falling level of interbank lending rates has been an encouraging aspect of the recent improvement in conditions in both financial markets and the wider economy. Unfortunately, there is limited evidence that lenders are passing on this drop in their funding costs to borrowers.”

The British Banker’s Assocation said: “Banks are currently providing around two out of three new mortgages. They price home loans competitively and will build into that figure not just the current interbank lending rates but other elements such as risk. Customers should shop around to find the loan which best suits their needs”

The record low interest rate has resulted in repayments falling to historic lows, and this has enabled many homeowners to overpay on their mortgages, giving them a chance to clear them years earlier than scheduled and save thousands of pounds in interest.

According to recently released figures around one in ten homeowners are now able to pay off their mortgage loans earlier than expected as a result of the record low base interest rate.

The research was carried out by First Direct, and showed that around 25 percent of all UK homeowners are now likely to repay their mortgage loans within the next ten years, and if current trends continue this figure could increase to as much as 35 percent.

The results of the study also showed that there had been a reduction in the time between purchasing a property to outright owning the property, with the time period dropping by two years over the past decade.

This again supports the evidence that people have started repaying their mortgage loans faster, enabling them to shift the burden of mortgage debt far more quickly than they may have anticipated.

One official from First Direct stated: “The aspiration to reach freedom day as early as possible has never been stronger. For many, a mortgage represents the biggest debt they will ever have – the typical householder will have five mortgages over their lifetime, which is a massive commitment. By making sounds financial decisions and choosing a flexible mortgage such as an offset, freedom can be closer than ever before.”

However, since the onset of the global credit crunch the availability of these mortgages has become far more restricted, and lenders who offer the mortgages have become far more stringent with regards to their lending regulations, resulting in an increased number of council tenants wishing to buy their homes being turned down for finance.

However, according to a recent report Scotland could be on the brink of bringing about a change, with Dundee bringing in an innovative if slightly controversial new scheme that could allow many council tenants to get a 100 percent mortgage to purchase their home.

The city council is hoping that the scheme will enable more council tenant to get on to the property ladder and buy their council properties, and at the same time will boost the economy.

However, the scheme has been met with mixed reactions.

Some officials and groups are concerned that the council will be taking on the high risk that many lenders and banks have refused to take on by offering these 100 percent mortgages, in many cases to those that have already bee turned down by banks and financial institutions. The TaxPayers’ Alliance said that the idea was “well-intentioned” but “completely wrong-headed”.

One member of the Alliance stated: “The extra danger of this is that we’re talking about councils potentially deliberately taking on even more risk that the bankers are willing to do. We should be learning the lessons of lending money to people who can’t afford to pay it back – that’s what got us into this crisis and I think it’s extremely risky.”

The group added that many of these consumers were keen to take advantage of the fact that the base interest rate is still at its lowest level ever, and in order to secure a good deal were willing to tie themselves in for longer.

The report also claimed that two year fixed rate products and tracker mortgages have become increasingly unpopular in the current economic climate, partly as a result of the ongoing recession.

One official from the group stated: “Two year fixes were always the favourite, or trackers when Bank Rate is widely expected to fall, but this rush to commit long term shows that consumer attitude has turned a corner.”

The group said that it was likely that most consumers thought that over the next year or two the base interest rate will start to go up again, and the current low rate deals that are currently on offer from many lenders will disappear from the shelves. Many are therefore keen to get themselves on to these competitive rates as soon as possible, even if it means tying themselves in for a longer period.

Whilst longer term products are more costly than the shorter term ones, this doesn’t seem to be putting consumers off, according to group officials.

The group official went on to state: “It seems borrowers are willing to pay marginally more for a recession buffer that will tide them over for as long as possible.”

Whilst the amount that was borrowed in terms of mortgages was at its lowest in eight years in April, there was a slight increase in the actual number of mortgages that were approved for the month.

There was no change in the level of personal loans granted by UK lenders for that month compared to the previous month. However, compared to a year ago personal loan levels were down by nearly 40 percent.

An official from the BBA said: “Households’ uncertain financial circumstances not surprisingly continue to dictate consumer behaviour, both in the housing market and in generating only low demand for new personal loans.”

The figures also showed that there had been a sharp drop in remortgaging levels, with the number of remortgages in April falling to the lowest level since 1999.

One mortgage broker stated: “Other loans, specifically remortgages, continue to decline as people take a ‘wait and see’ approach. For those at higher loan-to-values, this could prove very costly, as the general consensus is that fixed rates are as cheap as they are likely to get, with lenders anxious to keep their margins high in order to claw back some much needed profit.”

Another industry expert said: “Even if people have the funds at their disposal, to actually commit in this turbulent, uncertain market is a leap of faith that many are simply unwilling to make. This is a demand-led, as much as a supply-led slowdown.”

This has led regulatory authorities to put measures in place to help them to crack down on this type of fraud, which is becoming increasingly problematic, and this has been reflected in figures that were recently released with regards to fines imposed for mortgage fraud in the UK.

According to the recently released figures the value of fines handed out by the UK’s financial regulator, the Financial Services Authority, over the first few months of this year has already exceeded the value of fines that was handed out for the same type of criminal activity over the whole of the previous year.

The first few months of this year saw the FSA impose fines of more than £300,000 on those found to be committing mortgage fraud, according to the figures.

In addition to the sharp rise in the value of fines there have also been a number of cases of brokers and other mortgage industry officials and companies being banned from operating in the business by the FSA.

The regulator has been very clear with regards to its stance on mortgage related fraud in the current financial climate, and with the problem becoming a greater issue over the past couple of years it has pulled out all the stops to try and combat the issue.

Lenders are now being encouraged to be more careful and vigilant according to the Council of Mortgage Lenders, and the FSA has said that the measures that have been taken to combat mortgage fraud have acted as a ‘credible deterrent’ to industry officials that were considering getting involved in this sort of activity.