To anyone who takes any amount of interest in the mortgage and loan markets in the UK, it will come as no surprise to learn that the total amount of lending has fallen throughout the course of this year and is set to continue to do so.

With banks, building societies and other lenders still reeling from the impact of the credit crunch, there is very little money available in the wholesale market, which means that loan providers do not have the funding to be able to offer loans at reasonable prices and for those lenders who are in a position to do business, there are very few consumers who are prepared to commit to a new large secured loan or mortgage, due to the uncertainty of the short term future of the housing market, the rising cost of living and worries over the economy and job security.

As a result of these factors, a new report from market analyst Datamonitor has warned that the “future looks bleak” for both loan providers and borrowers alike and predict that by the end of this year, it is likely that the mortgage loan market will have shrunk by almost 20 per cent, with a total lending amount of £293.6 billion.

During the month of July alone, the amount of new lending on mortgage loans has dropped by 27 per cent against the same period last year and there is a further fall of 3 per cent predicted for next year.

The news is not so bad for the consumer credit market however, the sector which accounts for non mortgage related personal loans and credit. This area of lending is only expected to fall by around 3.2 per cent this year, with a total of £199 billion worth of new loans being granted followed by an increase in new lending of 1.4 per cent next year.

To back up these figures, the Council of Mortgage Lenders has released figures which show that new mortgage loans are down for the first half of the year by 18.9 per cent to £149.5 billion, against the same period last year.