The Crosby report on mortgage finance, commissioned by the Treasury in April, has investigated the causes and possible effects of the credit crunch.
Sir James Crosby, author of the review, has found that pressures on wholesale funding markets and the collapse of securitisation have sapped lenders’ desire to provide credit to consumers and businesses.
The review says: “Much lower base rates will help borrowers but will do little for the availability of mortgage finance. In such an environment, there are few banks with the capacity to increase lending. New net lending is likely to fall below zero in 2009 with only a modest recovery likely in 2010.”