FRESH evidence of a slowdown in the Scots property market has emerged with 14,000 fewer mortgages taken out in the first six months of 2008 when compared with the same period last year.

Figures released by the Council of Mortgage Lenders (CML) Scotland show that the buying and selling process has contracted north of the border with the number of mortgages issued dropping from 48,200 to 34,200.

First-time buyers have also suffered as lenders snub high-risk borrowers with 3000 fewer mortgages granted for this group between June 2007 and June 2008.

The scaleback in mortgage lending comes as personal debt in the UK was reported to be higher than the income generated by the country as a whole for the second year running.

The total amount owed by consumers through mortgages, loans and credit cards rose by 7.3% during the year to the end of June to stand at £1.444trillion, according to accountants Grant Thornton, compared to gross domestic product of £1.41trillion.

Crawford McCaughie, chairman of CML Scotland Council, said Scotland was feeling the effects of a depressed economy but added that the effect was "less pronounced" when compared to the rest of the UK.

"There is no obvious sign that the market will open up again until 2009 or even 2010," he said.

"This is not a short-term problem. Everyone thought that it would last six months, and then six more months have passed, and then another six months.

"Unless there is a serious input of liquidity into the market I can't see things changing in the near future." However, the CML Scotland figures indicate that the market conditions are easing slightly, with 2800 more loans secured between April and June this year when compared to the previous three months.

First-time buyer loans were also up by 300 over the quarter but the number of first-time buyers entering the markets has dropped slightly to 36% of the total number of buyers in Scotland from the 40% high in the first quarter.

Unsurprisingly, given the low risk approach of lenders, the average first-time buyer in Scotland now has a deposit of 13% of the property value, up from 10% the year before.

"Unfortunately, it is becoming harder and harder for the first-time buyer, those who typically need a higher loan to value. Lenders are looking at risk and would rather give a mortgage to someone who needs 75% of the value rather than a 90% loan," Mr McCaughie said.

Stephen Gifford, Grant Thornton's chief economist, said that despite tighter lending criteria and a reduced availability of debt as a result of the credit crunch, the UK continues to suffer from the legacy of cheap borrowing.

"Despite the global downturn flattening the growth of personal debt and GDP over the past few quarters, debt levels continue to grow at a faster rate than the income the UK generates.

"Although there is no cause for panic as personal debt is well-covered by the UK housing stock, the figures illustrate the continuing problem of growing personal debt levels in the UK.

"If the property market and economy continue to weaken, the current levels of personal debt will become unsustainable and there will be a marked increase in personal insolvencies," he said.