While the level has stayed stable at 0.5 per cent for almost three years, the Daily Telegraph reports that continuing fears regarding the stability of the wider economy and concerns of a second banking crisis are affecting the home loan industry.

Ray Boulger, senior technical manager at John Charcol, explained a lack of trust in the eurozone banking sector – exacerbated by the ongoing debt crisis in the region – has served to drive up the cost of tracker mortgages and short-term fixed rates.

The industry figure stated: “This results in the marginal cost of the new element of lenders’ funding being very high.”

Earlier in the month, research carried out by Barclays revealed the average amount of take-home pay used to settle mortgages was 15.4 per cent, contributing to home loan payments becoming their most affordable for a decade.

Paul Broadhead, head of mortgage policy at the Building Societies Association, explained generating these funds is the biggest obstacle facing would-be buyers at present, while other financial issues are also causing concern.

These include the state of the wider economy, employment levels and activity in the labour market.

Mr Broadhead noted the government is providing guarantees for higher loan-to-value lending, adding this could result in people getting “mortgages on new-build properties with smaller deposits of five per cent as opposed to ten or 15 per cent which has been causing a barrier”.

His comments come after Barclays recently reported that last year saw lenders offering some of their cheapest-ever home loan deals, which resulted in householders paying an average of 15.4 per cent of their take-home pay to cover these costs – the most affordable monthly mortgage payments for a decade.

Already the new Government has signalled an end to high priced rentals as it seeks to get the UK’s £21 billion annual housing benefit bill under some sort of control. True, there have been some examples where a landlord is profiting nicely from a housing benefit client, who is paying significantly more than a private sector tenant would. And it is this practice that the new regime plan to change, limiting the amount of benefit paid. From next April, benefit will be restricted to a maximum of £400 a week for a four-bedroom house. Forecasters predict this will displace as many as 14,000 households from inner London boroughs such as Westminster to cheaper ones such as Newham and Barking.

The other issue that landlords are hoping to see changed, is the way in which housing benefit is paid. Up to 2008 , the agency paying housing benefit passed rental payments directly to landlords. From that time, the Labour government, under the guise of “empowering” benefit tenants, decided to pay the money to the individuals themselves, giving them the responsibliity for paying their rent.

Many don’t pay. They spend the money on beer, fags or drugs instead – and are safe in the knowledge that it is difficult to evict them if they are behind on their rent. So the risks associated with being a landlord and renting to benefit tenants have risen substantially. Until this situation is changed, many landlords are looking to invest in those parts of the housing market that will appeal to the private sector tenant. While some of them still have a worry about their jobs into the future, at the very least they are more inclined to pay their rent.

According to the Royal Institution of Chartered Surveyors (RICS), the reduction is due to many “accidental landlords” – those who were forced to put property out to rent – opting to sell instead, as market conditions improve.

“If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties,” said RICS spokesman Jeremy Leaf.

In cash terms, that was a drop from £44.6 billion in 2007 to just £8.5 billion spent on new buy to let property in 2009. Potential lenders have substantially fewer mortgages to choose from, with fewer lenders in the marketplace. The only crumb of comfort for those looking to rent, is that mortgage approvals rose through 2009, so the hope is that more homes will come onto the rental market through 2010.

Compounding the issue is that some buy to let landlords have been unable to continue financing their properties on such good terms as those they previously enjoyed. Website Rent2Own has seen an increase in inquiries from landlords looking to sell their properties, which they can no longer afford to maintain when faced with their own personal financial squeeze thanks to the recession. Rent2Own can help sellers, whether buy to let landlords or private homeowners, who are looking for a quick sale.

Many people now in a position to buy are struggling to find the right property, as there is also a shortage of both properties for sale and realistic mortgages,” explained Ian Potter, operations manager at ARLA, the Association of Residential Letting Agents.

And last week, the Skipton Building Society decided to raise its standard variable rate from 3.5pc to 4.95pc, blaming “exceptional market conditions” – others are expected to follow suit. This is despite the Bank of England maintaining the base rate at historically low levels.

In a survey of 3,000 potential buyers, carried out before Christmas by Miller Homes, two thirds thought a lack of deposit was holding them back from taking their first step on the housing ladder. And 28 per cent of respondents thought they would need to save for five years before having a sufficient deposit to buy.

One sensible alternative for those people is looking into an alternative, growing sector of the marketplace – rent to own. This simply provides the would-be first time buyer with an opportunity to live in the house they want to buy, while saving the deposit to buy it. If you are a first time buyer looking for the way to stop just renting, take a look at the rent to own possibilities, explained in more detail here.