Building societies showed the damaging effect of the tightening credit markets as the number of mortgage approvals fell dramatically. According to the Council of Mortgage lenders Building societies advanced net loans of just £580m in March, down from £1.8bn in the same month last year. The reason is the shortage of funds in the credit markets. It is hoped that the Bank of England’s £50bn injection would help. But, this programme was mainly aimed at the big banks; the smaller building societies are yet to be helped by this rescue package.

Ominously mortgage lenders are now only lending to 1 in 10 would be homeowners as opposed to the traditional ratio of 1 in 5.