Mortgage lending slumped dramatically in January as buyers were forced to come up with record deposits to secure a loan.

Despite government efforts to get banks lending, criteria tightened further over the month in response to worsening market conditions, according to the Council of Mortgage Lenders (CML).

The CML figures showed only 23,400 loans for house purchase were approved in January, down from 32,400 in December and 48,600 in January 2008, a 51 per cent annual fall.

Just 8,900 of these loans were to first-time buyers, who on average raised a 24 per cent deposit for their home – the largest amount on record.

Although there are still mortgages on the market available at 90 and 95 per cent, industry experts believe few buyers are actually accepted on these rates.

Michael Coogan, CML director general, said: “The current withdrawal of many specialist, small and foreign lenders from new lending has created a huge gap in the capacity to fund mortgages to match consumer demand and this is continuing in 2009.

“People want to know why lenders are not lending.

“They are, but government schemes to restore the flow of funds are primarily focused on a few large banks and recent lending commitments by a few lenders cannot fill the gap overnight although we hope to see more funds flowing into mortgage activity later in the year.”

Gross lending declined to £11.7 billion, the lowest monthly figure since April 2001.

Those who can get access to credit are reaping the benefits of low interest rates, however.

The typical first-time buyer spent 15.8 per cent of income on mortgage interest payments, the lowest proportion since July 2004, the CML said.

A poll of chartered surveyors this week showed increasing interest in the housing markets but record sales lows.

The Royal Institute of Chartered Surveyors (Rics) blamed a lack of available finance for frustrating potential buyers from entering the market.