71% fewer mortgages compared with one year ago

Figures from Moneyfacts.co.uk have revealed that there are now 71% fewer mortgages available compared with this time last year.

There are now 3,748 mortgage deals available compared with 13,027 mortgage products last August, according to Moneyfacts, showing what an impact the credit crunch has had on the housing market.

Furthermore, the number of loans has lessened, with an average maximum of 90% loan-to-value (LTV) dwindling to 80% while the number of firms offering 100% mortgages has fallen from 33 to only 2.

Commenting on the figures, Michelle Slade, an analyst at Moneyfacts, said as a result of the credit crunch, the mortgage market has changed significantly.

However, the mortgage market should continue to improve from its current position, according to Ms Slade.

Evidence of this is the fact that in the last month alone, rates have been cut by several lenders including Nationwide, Abbey, Woolwich, Cheltenham & Gloucester and Halifax.

However, while this will be undoubtedly be good news for homeowners whose existing fixed-rate deals are about to expire, it will not help first-time buyers who are riding out the current situation in the housing market.

Property prices fell 1.7% in July, according to the latest Halifax House Price Index showing that the housing slowdown is gathering pace.

Many economists have indicated that property prices could fall by around 20% during 2008 and 2009, which is one reason why first-time buyers are holding fire.

Another reason first-time buyers are in wait and see mode is the fact that Chancellor Alistair Darling has recently announced plans to temporarily suspend stamp duty on house sales.

However, he has been accused of dithering and according to Ray Boulger of mortgage broker, John Charcol, housing transactions will diminish further until he confirms his proposals.

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