For new homeowners that are looking for a mortgage with only 10 per cent of the total cost of the home for a deposit, they only have a choice of just 8 per cent of all deals available. Moneyfacts, a personal finance analyst organization, reported that the number of mortgage deals on offer has climbed 66 per cent to 2,351. Fifty-eight per cent of those needed a 25 per cent deposit.

"Lenders may offer some mortgages to those people with just a 10 per cent deposit but the reality is that they prefer less risky borrowers with at least 25 per cent to put down," said Melanie Bien, director at Private Finance.

"They court these borrowers with lower rates and less stringent credit scoring. Those applying for 90 per cent loan-to-value deals must pay a significant premium on the rate and face tougher credit scoring, which often results in the mortgage application being rejected. For first time buyers, it is still incredibly difficult to get on the housing ladder."

Andrew Hagger of Moneynet.co.uk, said that lenders are fearful of making the mistakes that were made pre-crisis. "Competition among mortgage lenders has intensified throughout 2010 but it’s no surprise that over half the products on offer still require a minimum 25 per cent stake," Hagger said. "We may technically be out of recession but the economic situation is still fragile and lenders are taking a far more measured approach in their mortgage lending."

Chancellor George Osborne has called upon banks to fulfill their "economic obligation" and increase lending. Many economists see the tightening of banks as strangling economic recovery. However, Osborne has pushed for more lending for businesses and not the housing market, so mortgage loans will continue to be lower than the market calls for to boost recovery.