We are all aware that the availability of mortgages and unsecured loans has reduced dramatically over the course of the past twelve months due to the effects of the credit crunch, but the full extent of this slow down has just been made apparent by new research released by the price comparison website USwitch.com.

The firm claim that the total amount of money granted in unsecured loans and mortgages has reduced by £11 billion since this time last year, when the credit crunch began and that new lending is still dropping by an average of £2.7 billion every three months.

The worst hit area is in the mortgage loan market, which accounts for around £10 billion worth of the reductions. This is little surprise as lenders continue to struggle to obtain funding in the wholesale market to be able to grant loans and consumers have low confidence in the housing market at present, due to falling prices.

The same trend is apparent, to a lesser degree in the unsecured loan market, with a reduction of around £1.1 billion in new lending, which represents more than 157,000 fewer loans this year than at the same time last year. In the meantime, borrowing on credit cards has soared, as individuals find it difficult to be accepted for a loan, with credit card debt increasing by £717 million in the last twelve months.

A spokesman for U Switch said “In just twelve months, this economic landslide has sent the consumer lending market into disarray. Our research has confirmed that both mortgage lending and unsecured loans are drying up by the day. For those with a perfect credit record, it’s unlikely this will be an issue, but others it could be problematic. In response to this, it seems consumers are turning to credit card providers for extra cash. Whilst this is good news that people can still access extra money if they need it, this is not a sustainable solution for the problem. Ultimately, this has had a huge knock on effect on the housing market.”