The housing market has been buoyant over the past few years, but mortgage providers and first-time buyers are both now facing a tough time. Following announcements from the Bank of England that there has been an overall decline in the total number of UK home-buyers, and a declaration from the Financial Ombudsman Service (FOS) that the number of disputes concerning mis-sold mortgage endowments has now hit record levels, it seems that mortgage lenders are facing a bleak time. Add to this the results of a new survey, by the Edinburgh Solicitors Property Centre, which shows potential first-time buyers fear that they may never get onto the property market, and you start to see a worrying picture of the housing market emerge.

The problem with the mis-selling of endowment mortgage products has recently made the headlines in the world of personal finance. The FOS admitted receiving 70,000 new complaints about endowment mortgages, the equivalent of 1,300 a week, compared to just 300 a week three years ago.

The main grounds for complaint revolve around people who believe that mis-selling had occurred regarding policies. Many consumers feel that the endowment product sold to them was unsuitable either because it would lead to financial short-falls, or because the level of risk involved had not been adequately explained to them prior to the policy commencing.

The sheer scale and number of complaints has lead to changes in regulations and the imposition of deadlines for lodging complaints.

"The number [of complaints] we can expect to receive in the current year will largely be determined by how financial services firms meet the new regulatory requirements on so-called re-projection letters. Most of these letters will warn of likely mortgage shortfalls and many will give, for the first time, an explicit deadline by which any complaint must be lodged.", Walter Merricks, chief ombudsman.

The situation is no better for first-time buyers either. Forming a significantly important sector of the house buying market, a recently published study from GMAC, the financial subsidiary of General Motors, carried out by Professor David Miles, who was originally commissioned to investigate the mortgage market by Chancellor Gordon Brown, has found that dramatically fewer first-time buyers than ever before are currently entering into the housing market.

A report from mortgage lender, Abbey, highlighted that the main concern for first-time buyers is not a lack of desire to buy their own house, but rather a fear over whether they feel they can afford to do so. Just over a third of the potential first-time buyers in the survey, indicated that they wanted to buy a home within the next year, however only 5% were confident that they would actually be able to.

These figures are disappointing when viewed against the backdrop of the initiatives by Gordon Brown to help first-time buyers, through the increase in the zero rate stamp duty threshold announced during the budget, and the introduction of shared ownership schemes with purchasers owning between 50% and 75% of their home and paying rent on the remainder.

Recent reductions in the cost of loans for first-time buyers has also occurred, and many experts believe that the base rate may fall further, creating a spark for further reductions in the cost of monthly mortgage payments. These should all be seen as good news, but new buyers still do not appear to be convinced that now is the right time to buy.

There are other important influences affecting this group other than the straight affordability issue, GMACs, executive chairman, Stephen Knight, reported, Buying property is seen as settling down among 71% of those questioned.More than half of the people studied felt comfortable with delaying buying a property until they are over 30. This matches with the current average age of a first-time buyer, 34. Stephen Knight also stated that an increasing problem for those who go on to higher education is that, many graduates, especially those who leave college with large student debts, are unwilling to take on additional financial commitments.

According to research from Moneynet, first time buyers during May were looking for an average mortgage amount of 135,966 for an average property value of 205,284 on an average salary of 39,027. With the average single UK salary around 24-25k, current house purchases are therefore generally requiring the combined funds available from dual incomes, combined with many young families being worried about job security, Stephen Knight believes there are clearly social and financial issues that need to be addressed.

The greatest worry for a quarter of would-be buyers according to the Edinburgh Solicitors Property Centre is that they feel that if they dont get on to the property ladder soon, they never will.