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Mortgage and personal lending drops by £11bn
Total mortgage lending and unsecured personal loans have dropped a staggering £11bn in the 12 months since the start of the credit crunch.
According to research by online price comparison service uSwitch.com, lending in the mortgage and unsecured loan market has fallen at £2.7bn a quarter on average over the last year.
In total, providers have reduced lending by £11bn in these two sectors combined from the second quarter of 2007 to the second quarter of 2008.
Gross lending on mortgages alone has fallen on average £2.5bn from quarter to quarter over the last year, accounting for a total fall of £10bn.
Meanwhile, comparing the 12 month period from July 2006 to June 2007 and the 12 months from July 2007 to June 2008, mortgage lending has dropped by almost £20bn.
The number of unsecured loans issued has also dropped by an average of 39,338 (or £283m) each quarter over the past year. This decline totals £1.1bn over 157,000 loans when comparing the second quarter of 2007 to the second quarter of 2008
At the same time, gross credit card lending has increased, growing by an average of £179m a quarter over the last year. This equates to a total increase of £717m over the last year, when comparing the second quarter of 2008 to the second quarter of 2007
Simeon Linstead, head of personal finance expert at uSwitch.com, said: "In just 12 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 perfect credit records, 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 it's 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."
