Mortgage lending is at a 34-year low.

Recent data from the Council of Mortgage Lenders (CML) shows the number of mortgages being given to prospective house buyers has fallen in the last year to its lowest level since 1974.

In 2008, there were only 516,000 house purchase loans – a decline of 49% from 2007.

Only 32,000 mortgages were approved in December 2008 showing a decline of 5% from November and the lowest level since monthly records began in 2002.

The credit crunch has had a significant effect on mortgage lending. On average, first-time buyers had to put down a 22% deposit in December.

Director General of CML, Michael Coogan, said: “The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year. This low level of transactions is insufficient for the functioning of an efficient market.

“Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through. Further action may still be necessary to increase transactions, stabilise prices and restore confidence.”

Remortgaging has also seen a dramatic fall of 26% from November to December as the combination of reversion rates and more restrictive lending criteria encouraged borrowers to stick with existing mortgages.

Also the current economic climate is making it difficult for first-time buyers to get on the property ladder. The CML states that the tightening in credit criteria, falling house prices and the weakening economy are factors that have restricted buyers from entering the housing market.

In December, there were 12,100 loans to first-time buyers, the lowest figure since 2002. The average first-time buyer borrowed 3.1 times their income and spent 17.1% of their income on interest payments.

The popularity of tracker mortgages increased as official rates declined, accounting for 29% of new loans, compared with 16% in 2007.

However the majority of borrowers continued to choose certainty over monthly payments with 58% opting for fixed-rate mortgages.

There are 11.7 million mortgages in the UK, with loans worth over £1.2 trillion.