moneysupermarket.com: HMRC property figures

Commenting on figures from HMRC showing property sales plunging by 32 per cent compared to this time last year, Louise Cuming, head of mortgages at price comparison site moneysupermarket.com, said: "The fact house purchases are stalling is nothing new but what comes as a nasty surprise is how far sales have plunged.

"The mortgage industry should bear much of the blame for the stagnation of the housing market as lenders have distorted the landscape significantly over the past 12 months. The mortgage market is unrecognisable today, with the sheer number of products decreasing every day - from more than 30,000 in August 2007 to around 5,000 today.

"In addition, the average cost of borrowing has risen steadily since December despite three base rate reductions. This has been particularly evident in the past month with a 0.25 per cent increase in the average two-year fix from the UK's ten main providers since 26 May, including an increase of 0.11 per cent in the past week alone.

"To add to this worrying trend of more expensive borrowing, indications are that the MPC is now more likely to consider increasing the base rate to try and combat inflation. It almost doesn't bear thinking about what affect this will have on homeowners' pockets and their increasingly fragile confidence.

"Lenders have done a complete U-turn in respect of the risk they are prepared to take when lending, which is specifically affecting borrowers with little or no deposit or equity. This in turn directly affects first time buyers, who are the absolute lifeblood of the housing industry."