It is reported by the Council of Mortgage Lenders (CML) that the level of lending reduced by 9% month-on-month during January. It is estimated that £10.4 billion of lending was advanced last month. This is a 3% reduction on the same period 12 months ago. Even though there is a slowdown, the CML states that it thinks activity to rise in months ahead due to improved mortgage availability and lots of cheap deals on offer.

Other research issued recently by the financial information website 'Moneyfacts' states that a recent mortgage price war amongst banks and building societies has reduced the average fixed rate mortgage rates to their lowest in nearly 25 years.A typical two-year fixed rate deal across all loans-to-value is 4.11 per cent, while a five-year fix has reached 4.14 per cent. In 1989, a two-year fix would have had an average rate of 12.83 per cent while five years was 12.85 per cent.

Record low rates of interest mean that borrowing is cheaper and lenders have rushed to provide their "best ever" mortgage rates, since the Government introduced a 'Funding for Lending' scheme last summer. This gave lenders access to low cost finance.The CML reported recently that the number of first-time buyers in the UK rose to its highest annual level for half a decade in 2012.

The research has also highlighted "encouraging" indications that people with smaller deposits are now also able to access mortgage deals. Nearly one in 40 first-time buyers is taking out a 95% mortgage, in contrast with less than one in 100 twelve months ago. In mean time, over 2,900 homes have been 'reserved' under the Government's 'NewBuy' scheme, this enables home movers and first-time buyers to buy a home with as little as a 5% deposit.

While the mortgage market has got better, many are still faced with strong pressures on their finances as a result of high living costs and a lack of increase in salaries. This is keeping back the desire and ability to borrow more.

CML market and data analyst Caroline Purdey said: "Housing sentiment remains positive, despite ongoing economic pressures."

"A worsening in the outlook for inflation presents a greater headwind, but we still expect the Funding for Lending scheme to lift activity over coming months." and "House purchase activity was robust into the start of 2013, on the back of better mortgage availability and pricing, and we share the Bank of England's confidence that this will continue over the coming months."