The gloom deepens with a very downbeat report from the Bank of England.
Lending from banks and building societies is likely to be cut back further over the near future, a new report from the Bank of England claims.
The central bank's quarterly credit conditions report suggests that default rates will be on the rise in the UK due to the continued economic gloom, leading to lenders becoming still more conservative. Credit restrictions have been in force since the onset of the financial crisis - with cheap products such as 100 percent mortgages, for example, disappearing from the high street altogether.
However, the new study is likely to strengthen the case for an interest cut, which generally provides a stimulus to economic growth. This is because a cut to the bank rate is generally mirrored by high street loans and mortgage providers - making repayments cheaper and encouraging consumers to keep spending.
It would also encourage mortgage provision - restrictions on which have been a direct factor behind recent house price falls.
Commenting on the credit conditions report to the BBC George Buckley, an economist at Deutsche Bank, said: "This is precisely what we would have expected, it reinforces the fact the housing market still has a lot further to weaken yet."
In the report, the Bank said: "Lenders reported [to us] that the changing economic outlook, their expectations for the housing market, and changes in their appetite for risk had contributed to the decline in credit availability."
Compare loans via money.co.uk
