The falling number of mortgage deals available is good news for first-time buyers, says Firstrung.

Paul Holmes, operations director at the firm, explained that the reduction of cheap and easily obtainable credit will eventually force house prices down.

Claiming the problems with the mortgage market is a "natural consequence" of the credit crunch, he predicted that during the next two years, house prices will fall by 20 per cent.

"If first-time buyers think they've got a bargain, then fine, buy it," he said. "If not, they've waited this long so where's the harm in sitting out the market a little bit longer and watching as this drama unfolds."

A particular opportunity for first-time buyers is house builders who have over-developed and seeking buyers quickly, Mr Holmes added.

Recent research by Abbey Mortgages revealed that 42 per cent of prospective first-time buyers are spending their savings for a deposit on other things such as cars and holidays.

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