The latest fall in mortgage approval rates will serve as a wake up call to anyone aiming to sell their home in the UK, it has been claimed.

According to David Kuo, head of personal finance at Fool.co.uk, the UK’s housing sector is now very much a buyers’ market and that anyone hoping to sell a property needs to consider carefully the price they will settle for.

Millions of homeowners now face debt management and money problems and Fool.co.uk expects to see their troubles made worse by a 20 per cent slump in property prices over the course of this year.

"The drop is not unexpected given that lenders have been exploiting the Bank of England’s three interest rate cuts this year to beef up their own balance sheets," said Mr Kuo.

"But it is, nevertheless, a wake up call for homeowners," he added.

According to a report from Gocompare.com, money problems brought on by the credit crunch have left 3.6 million British homeowners feeling trapped in their current property.

Millions of British homeowners feel trapped in their current property because of the money problems they face, according to a recent study.

Figures compiled by Gocompare.com show that close to a quarter of all homeowners feel that their financial situation is preventing them from moving to another property.

The money problems facing homeowners were found to be having a particularly strong impact among people aged under 25, more than a third of whom have abandoned plans to relocate over the course of the coming 12 months.

Declining house prices and the credit crunch are seen as the principal reasons why homeowners are "battening down the hatches" in preparation for a stormy period for the British economy.

"This research shows just how hard the economic downturn is biting," said Hayley Parsons, chief executive of Gocompare.com.

Last week, Paul Holmes, chief executive at Firstrung, said that the recent house price boom in the UK has been a "disaster" for those people who are yet to get on the property ladder.

The average house price in the UK plunged by close to 2.5 per cent over the course of May, according to the latest figures compiled by Nationwide.

Millions of homeowners are experiencing serious debt management and money problems and the average property price has fallen by 4.4 per cent in the past 12 months.

First-time buyers and people looking to remortgage are finding it increasingly difficult to secure a good deal and the reduction of house prices has begun to accelerate, Nationwide reports.

Average house prices fell by £5,000 over the course of May, which represents the sharpest one month decline since the building society started recording relevant data 17 years ago.

"The pace of house price falls accelerated in May as more weak economic news added to the gathering momentum of negative sentiment about the housing market," said Nationwide’s chief economist Fionnula Earley.

Meanwhile, the Axa insurance firm warned that the money problems facing British homeowners could soon be worse than those experienced during the last property crisis in the early 1990s.

The mortgage market in the UK is becoming a lottery for people looking to secure a good deal on a home loan, it has been claimed.

According to Moneyfacts, mortgage deals are now typically available for only 11 days, which the company suggests leaves borrowers having to make borrowing decisions quickly and hope for the best.

The personal finance information firm also reports that the number of options available to British consumers has fallen dramatically over the past 12 months.

And this is viewed as particularly bad news for homeowners looking to avoid debt management disaster when they come to the end of their current fixed-rate mortgage arrangement.

"Until the current market readjustment is complete, the ability to time the mortgage market has become more of a lottery than an art, with the majority of today’s better deals expected to have disappeared by this time next week," a statement from Moneyfacts read.

The Council of Mortgage Lenders predicts that around 45,000 properties in the UK will be repossessed as a result of debt problems over the course of this year.

The house price boom witnessed in the UK during most of the past decade was a disaster for the health of the economy as a whole, according to one expert.

Paul Holmes, chief executive of the first-time buyer solutions company Firstrung, insists that only a particular sector of the population benefited from the property boom, while millions of people have been left with serious debt management and money problems

"Middle England" saw the value of its assets increase dramatically in recent years but a generation of would-be first-time buyers have been left with a serious struggle to get a foot on the property ladder, Mr Holmes maintains.

"For first time buyers it was not good news that property prices were going up, it was a bloody disaster," he said.

"The quicker society wakes up to the fact…then all the better."

A recent study by personal finance firm Fool.co.uk showed that mortgage-related debt problems among young British homeowners have left almost one in four worried about the prospect of negative equity.

A new study has suggested that there has been a significant rise in the number of UK homeowners who have missed a mortgage payment due to insufficient cashflow.

Cited by IFAOnline, the LeadPoint research shows that there was a one per cent increase in the number of missed contributions between March and April.

March figures showed that 12 per cent of homeowners had missed a payment, while in April, 13 per cent were said to have done so.

Commenting on the figures, Nick Chapman LeadPoint UK managing director, said: "Our analysis confirms that things are getting a lot tougher for consumers in the current market and will continue to do so over the coming months."

In collecting the data, the group compared more than 20,000 remortgage leads over the period.

The news follows recent figures from the Council of Mortgage Lenders showing that there has been a recent rise in the number of court repossession orders for those who have been unable to fulfil mortgage and debt obligations.

The level of mortgage lending across Britain has remained subdued in recent weeks, according to the latest data.

March saw a one per cent fall in the number of loans for property purchase and with so many people facing debt problems the Council of Mortgage Lenders (CML) expects to see this downward trend continue.

Over the course of the first three months of this year, around £75 billion worth of mortgages were taken on, which was almost £9 billion less than the same period of 2007.

According to the CML, the mortgage market is still be impacted by a "shortage of funding" that has led to fewer consumers being approved for home loans in recent months.

CML director general Michael Coogan commented: "House purchase transaction volumes will continue to deteriorate in the coming months as recent approvals data from the Bank of England has shown."

Last week, the CML said that anyone struggling to manage their mortgage-related money problems should aim to prioritise their debts.

Homeowners that are struggling with money problems should prioritise their debts in order to avoid repossession, according to the Council of Mortgage Lenders (CML).

Communication between lenders and customers is important and agreements should be reached over which debts need to be repaid with the most urgency, the council maintains.

With financial discipline and the right advice from appropriate parties, British homeowners can avoid debt management disaster and remain in possession of their home, says the CML.

"Lenders are committed to keeping the number of repossessions as low as possible, even in more challenging economic conditions," said Michael Coogan, the council’s director general.

Mr Coogan’s comments came after figures from the Ministry of Justice showed that the number of court orders for repossession in England and Wales was 17 per cent higher in the first quarter of this year compared with the same period in 2007.

The Bank of England has opted to maintain the base rate of interest at five per cent, it has been announced.

Having reduced the rate by a quarter point last month, it was widely anticipated that there would be no change this month but some groups have suggested the move should have been made.

A cut in the base rate might have helped ease the debt management and money problems being faced by thousands of British families and the Council of Mortgage Lenders (CML) has claimed such action would have been good for the housing sector.

The CML’s director general Michael Coogan said: "The monetary policy committee had an opportunity to act to anticipate the worsening economic environment today and it is disappointing that there has been no change."

Earlier this week, Peter Beckett, business development director for iammoving.com, claimed that funding a mortgage deposit through unsecured loans or credit cards is a major and ill-advised financial risk.

Hundreds of thousands of British homeowners are set to experience a serious financial shock their fixed-rate mortgage deal expires over the course of this year, it has been asserted.

Reflecting on its own data and that from the Council of Mortgage Lenders, Nationwide has suggested that up to 1.8 million homeowners could soon find themselves with a greater mortgage-related debt management burden.

However, despite the money problems set to cause difficulties around the country, the building society has aimed to make clear that the housing market is not in such bad shape as it was in the 1990s, when fixed-rate mortgage deals were uncommon.

"Some groups of borrowers will certainly feel the effects of higher mortgage rates but around 85 per cent of borrowers will be seeing no impact," said Fionnuala Earley, Nationwide’s chief economist.

Earlier this week, the Centre for Economics and Business Research predicted that the number of homes being repossessed in the UK will be 25 per cent higher this year than was the case in 2007.