Mortgage lending to first-time buyers and home movers slipped back by around one quarter at the start of this year, banks and building societies have reported.
By contrast, lending to buy-to-let investors is continuing to go from strength to strength, figures from the Council of Mortgage Lenders (CML) show.
Housing market experts are predicting further interest in the buy-to-let market in the coming months from people looking to use some of their pension pot to invest in a property.
The CML said that lending to first-time buyers in January was at its lowest level for 21 months. It said that 19,000 home loans with a collective value of £2.8 billion were handed out to people taking their first step on the property ladder in January, which is a 27 per cent fall compared with December.
Meanwhile, 22,400 loans worth £4.2bn were handed out to home movers in January. This marked a 24 per cent decline from the previous month.
Paul Smee, director general of the CML, said the falling figures reflect the “traditional seasonal lull” that happens at the start of every year.
However, this year the lull has been more pronounced than it was in January 2014. The CML said that 14 per cent fewer loans were handed out to first-time buyers and 17 per cent fewer were advanced to home movers in January this year compared with the same month a year earlier.
Mr Smee said: “Affordability constraints remain a factor for would-be borrowers, but we are still projecting lending to pick up over the next few months.”
Experts have said that the forthcoming general election could cause some disruption to housing market activity in the coming months. A shortage of homes on the market to choose from has also been cited in housing market reports as a potential stumbling block for home buyers.