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A year ago the credit crunch first got its teeth into Northern Rock, shaking a lender that had swiftly become one of the biggest in the country.

Optimism soon died in the harsh light of day as the government dawdled, Northern Rock was nationalised and other big banks were forced to go cap in hand to their shareholders and ask for more cash. Lenders were forced to face up to the consequences of playing follow the market leader for the last few years.

A look back to last summer conjures images of lemmings heading towards a cliff. If someone told you they were willing to jump of a cliff just because their friend did, you would question their intellect and sanity. Then why was it alright for lenders to operate the same approach to pricing?

Quite frankly, it was not alright for the industry to play follow the market leader. Volume cannot and should not be chased at all costs. This lesson has come at an overly harsh cost for the industry, the economy and the general public.

The world of mortgages is now a completely different place. From a land of plenty we are now in a land of scarcity.

This August the total number of home loans available is 3748 compared with 13,027 a year ago. The number of sub-prime lenders has dropped from 37 to 13 and while 11 providers had 100 per cent loan-to-value deals up for grabs last summer, now nobody offers such deals.

But perhaps it is time to get optimistic again. Lenders are pricing more for risk. In the coming months the mortgage market should continue to improve from its current position as lenders are hit by a second reality check.

A year on from the credit crunch hitting, the number of repossessions is still historically low.

In the last month numerous lenders have cut rates, so borrowers looking for a new deal can take some comfort from this fact.

The number of products available will steadily increase and rates will lower with increased competition between lenders. Competition in the last few years has been a great thing and has led to a great deal of innovation and hope for individuals who would previously have never been allowed to own their own home.

It will be a while before lenders regain a healthy appetite to lend with the maximum LTVs on offer last summer, but I hope this is largely due to the possibility of a further decline in property values rather than perceptions of the risk presented by such borrowers.

The one thing everybody I speak to agrees on is that it is highly unlikely we will ever get back to the same levels we were at a year ago.

Is this really a tragedy? What we need is a market that offers acceptably priced deals for those who need a roof over their heads. A bunch of lemmings willing to run off a cliff just to be at the front of the crowd is not required.

Click here for the online-only edition of Mortgage Adviser. Mortgage Adviser will be back in print on 27 August.