Home loans are becoming harder to obtain for first time buyers because they can’t provide the required high deposits. Homeowners are having problems obtaining remortgage because they have lost equity. Analysts are forecasting a long recovery. Things are carefully being watched as analysts try to figure out the next move by the housing market.

Ed Stansfield, chief property economist at Capital Economics, said: "There is a sense that people have too little equity in their homes to be able to switch their mortgage, and even if they do have enough, there is little incentive to do so.

"The rates on offer - once arrangement fees are taken into account - to move from a lender’s standard variable rate are not particularly strong. There are simply not the incentives for people to switch and they have too little equity to make it easy to do so."

According to data from Nationwide, first time buyers currently pay an average deposit in the amount of 35,000 pounds. The average deposit of 25 years ago was 1,300 pounds.

The credit crisis caused a drop in house values which left homeowners with less equity in which to obtain remortgage. Some have even found themselves in negative equity; living with a mortgage that is more expensive that what the home is worth. There was a slight gain in home prices but still much more is needed to reach pre-crisis level.

Paul Samter, an economist at the CML, said: "For the time being, the effects of government spending cuts have yet to make an impact on mortgage demand, and activity continues on its upward trajectory.

"But we still expect house purchase activity to be muted in the coming months. Both consumer demand and lending capacity remain distinctly difficult to call, especially in the light of the government’s austerity measures and their possible impact."

One good measure is that Briton’s are reportedly becoming more familiar with their mortgage loans. Analysts are still suggesting homeowners be ready should a change in interest rates occur. A remortgage to get out of a SVR (standard variable rate) while interest rates are low has been suggested.

According to figures from accountants with Pricewaterhouse Coopers, should interest rates increase to levels seen in 2008, home owners would see an increase of 1,800 pounds a year in interest payments on their mortgage. What will happen next in the housing market is an unknown, whether recovery will be stalled or very slow, whether interest rates will rise or remain, analysts debate the outcome. Homeowners and new would be homeowners must be aware and watch the market as well as the analysts do.