More than half of all mortgage brokers claim lenders are rejecting up to eight out of ten applications for home loans.
A survey found more than 77% of brokers also believe the credit freeze is worse or much worse than last year, with less than a fifth feeling there has been no change.
The Professional Insurance Brokers Association (PIAB) said the main reasons clients were refused mortgages was because 35% of applicants had no savings, 32% did not qualify for the amount required, there were fears over job security for 29% while another 29% had a bad credit history.
Rachel Doyle, Director of PIAB Mortgage Services, said the findings were stark but not surprising given the lending freeze for virtually everyone except those whom lenders consider to be safe.
"When you factor in the likelihood that many potential first-time buyers are probably not now applying for mortgages because they know banks have tightened up considerably, the situation is extreme," said Ms Doyle. "The lack of credit is a major issue and it is hampering a recovery in the property market."
UCD economist Morgan Kelly on Monday warned the country faces a second banking crisis involving hundreds of thousands of families with high mortgages. He said at least one in eight mortgages - 100,000 - are already under water with the problem expected to worsen as house prices and social stigma crumble. PIAB stated property prices have dropped by about 35% in general since the peak in December 2006, with the average first-time buyer paying half of what they would have paid on monthly mortgage repayments.
Ms Doyle said first-time buyers and self-employed people are being hardest hit by the credit squeeze.
"If we are at or close to the bottom of the market, this means that these people are not able to access what could be very good value properties," she said. "They are also missing out on the opportunity to fix their interest rates at a reasonable level for the foreseeable future. Interest rates are on the rise, making the situation ever more difficult."
She advised anyone trying to get onto the property ladder to ensure that they are well informed on up-to-date practices before approaching lending institutions. "Ideally people should seek independent advice from a broker to ensure they get to choose from the best available options," Ms Doyle added.
PIAB has over 900 member firms throughout Ireland, with 103 surveyed last month.