Smallest number of new mortgages for 35 years

The number of mortgages on new homes has collapsed to the lowest level since 1974 in a market "barely recognisable" from the boom years.

Home loans for first-time buyers and people moving house halved from 1.02 million to 516,000 in 2008, according to the Council of Mortgage Lenders.

In December there were 32,000 home loans for new purchases, down five per cent since November and the lowest level on record, the CML said.

First-time buyers have been particularly hit by the tightening of loan conditions.

In December there were 21,100 mortgages to first-time buyers worth £1.4 billion, again the lowest recorded. The average deposit was 22 per cent, the highest in 34 years.

The CML figures also show a dramatic shift in the type of loan. Tracker mortgages, which follow the base rate, accounted for 29 per cent of new loans, up from 16 per cent in 2007.

Fixed deals, which set the rate for two, three or five years, made up 58 per cent of deals, down from 73 per cent.

Michael Coogan, the council's director general said: "The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in a year."