The Council of Mortgage Lenders (CML) has suggested that whilst mortgage lending is currently stable, the future of the market is difficult to predict.

The CML suggested that the current economic instability is largely responsible for the uncertainties in the market.

Figures released by the CML show that in September, the number of mortgages that were taken out to purchase a new property had fallen by 2% from August. Although the number of mortgages actually taken had dropped, the number of approved mortgages was actually 3% higher than in September 2010.

People buying property for the first time also needed an average deposit of 20% of the homes value. Whilst this figure was about the same as in August, the number of first time buyers fell slightly in September.

However, when compared to last year, the average deposit needed to purchase a property had fallen slightly and and the number of first time buyers has risen, although it is still at a low level.

Experts suggest that the high deposit required to purchase a property is one of the main reasons why the housing market is currently slow and the CMI are calling for more assistance to help first time buyers get on the property ladder.

In September, the number of property owners who remortgaged fell slightly from August leading to some suggestions that the remortgage market is starting to struggle. However, the third quarter of 2011 showed 23% more remortgages than in the third quarter of 2010.

Mr Paul Smee from the CML suggested that whilst there were small drops in house purchases and remortgages between August and September, the market was relatively stable.

However, Mr Smee went on to suggest that the Eurozone crisis is having an impact on bank to bank lending. The impact on the banks’ confidence in lending to each other is leading to higher borrowing charges between them. This in turn is raising the costs of mortgages and as such is making the future of the market more difficult to predict.

The CMI report suggests allowing potential home buyers to borrow from their pension funds to find the deposit needed to buy a home. This could also come with a system of mortgage indemnity guarantees, allowing any mortgage lenders to claim on the indemnity, should the borrower then fall behind on their mortgage repayments.

The mortgage lender and house builders could work together to provide the guarantees, but the government could also share the risks if they could not be applied on a purely commercial basis.

John Cridland from the CBI suggested that this could give hope and support to young, first time buyers. He added: “We could reduce the risk of higher loan-to-value mortgages if the government encouraged lenders to take out insurance against the borrower failing to meet payments. Owning a home has been a natural aspiration for generations of Britons since the 1950s, and should not become the preserve of a lucky few.”