The number and size of mortgages has been falling every month for the past year in the UK. Most people would expect that given the problems in the finance markets and the recent falls in house prices, but just how serious is this to the UK mortgage industry? Weel if you think that these reductions in business have not been seen since the early nieties then you get an idea of the gravity of the situation.

We now have the lowest level of mortgages being arranged for 15 years and a number of industries that rely on bouyancy in the housing are starting to adjust their strategic plans in order to weather the approaching storm. It's an approaching storm because these new levels of mortgages are yet to impart their full effect onto the economy as a whole. Builders are still working on projects that started six months to a year ago, but with very few new projects starting at the moment, the amount of work available for building firms in the months ahead looks lean.

Fifteen years ago house prices fell in the UK by about 20%, but since then prices firstly recovered and then started to sustain annual growth rates nearing 10 per cent. That brought huge levels of investment into the housing-driven economy, but now that investment cash is going elsewhere. This means fewer new houses being built, fewer home improvement projects and less frequent house moves. All worrying news for home builders and home sellers.

Last month the UK's biggest building society, Nationwide, told us that house prices fell by 2.5 percent, the biggest monthly fall for many years. Other observers are predicting an annual fall in prices of between 7 and 10 per cent, but if the Nationwide's figures continue their current run, that fall could be much bigger.

It's now much more difficult to get any kind of mortgage. Mortgage lenders no longer provide 100 per cent mortgages and many firms are asking for 10 per cent down payments. That means deposits of between £15,000 and £20,000 for most home buyers. We are already a nation that has a low aversion to debt and little propensity to save, so those kinds of deposits are going to be very difficult to find for most people wanting to become first time buyers. It will be interesting to see how the levels of first time buyer mortgages perform over the coming months.

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