Most industry predictions for 2009 are that net lending will be negative to the tune of about £25bn as consumers delay getting on the housing ladder until house prices settle.
So negative net lending figures from mutuals as well as banks are likely be the norm for the next six to 12 months.
It is clear that the government will have to stimulate the market by using taxpayers’ shares in Lloyds Banking Group, Bradford & Bingley and the Royal Bank of Scotland to make them take up the slack, even though they will not want to.
At their peak, these banks were responsible for more than 30% of the mortgage market and without them there is little hope of avoiding negative lending numbers in 2009.
Halifax should be allowed to offer what it does best – residential loans at higher LTVs, especially for first-time buyers. And BM Solutions should lend to landlords who have been boosting the supply of rented accommodation.
Bank of Scotland should be lending to the self-employed who have been left high and dry in the recession while Lloyds TSB and Cheltenham & Gloucester should focus on remortgaging home owners and RBS must concentrate on business lending.
With a general election due within 14 months Labour must act now or it will end up on the scrapheap.