More lenders 'coming into 90 per cent mortgage market'

Ray Boulger, senior technical manager at John Charcol, said that he thinks an increasing number of institutions will be offering loans with 80, 85 and 90 per cent loan to value, following a trend that began a couple of months ago.

Overall, however, he thinks that there will be constraints on the mortgage market caused by a lack of mortgage finance, which may restrict the amount of activity that can take place.

Low interest rates may mean that more people will choose to opt for a variable rate mortgage instead of a low rate product, he added.

Rising house prices in the new year may help to galvanise the market again, as people who could not afford to move last year because they did not have enough equity may find that they can afford to change to a new address.

According to figures from the British Bankers' Association this month, the lending for house purchases increased from 42,552 in October to 44,713 in November.