Its Mortgage Monitor said the fall was triggered by the tightest lending conditions since February with loan-to-values at their lowest level since February.
The average deposit size was 40% in October, with just under 1% of total lending on loans with 10% deposit or under. In comparison, this figure was 13% in October 2007.
Lenders are targeting low LTV borrowers because of their fears over restricted credit conditions and the protracted crisis in the eurozone, said e.surv.
The report said: “This has sparked a fall in the number of lower income buyers, with purchase approvals falling fastest in the cheapest property brackets. Loans for purchases below Å250,000 fell from 36,187 in September to 35,772 in October.”
Richard Sexton, director of e.surv, said, “With perhaps the notable exception of buy-to-let lending, lenders are in no position to begin growing their loan books in the current climate, although noises coming from some sections of the market would have you believe otherwise.
“Credit conditions are sclerotic and banks are under intense pressure on capital. The market is actually showing remarkable resilience against the economic tidal waves battering our shores from the eurozone.
Sexton said banks were becoming more cautious, having upped their high LTV lending over the summer in a bid to increase their market share.
“They are now focusing on wealthier borrowers,” he said.
“It looks like they are still pushing high LTV mortgages, but the truth is the criteria are so strict, most first-time buyers aren’t eligible. These tightening credit conditions are threatening to widen the vacuum at the bottom of the market.
“That vacuum is being filled by wealthier buyers and buy-to-let investors, who are propping up the figures. They are being seduced by excellent value fixed rate mortgages and high rental yields.
“Lenders are now falling over themselves trying to offer the lowest fixed rate deals, which is great news for borrowers who can build the deposit required to access these great rates.”
