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The mortgage club's quarterly adviser confidence index revealed 45 per cent of advisers expect business to get worse in the next three months, compared with 33 per cent in the second quarter of this year and 16 per cent in the first three months of the year.

Stephen Smith, director of housing for L&G, said despite the gloomy outlook there were income opportunities available in other sectors.

He said: "Mortgage advisers are clearly getting more pessimistic in general as the year goes on. However, there are some positives to be found in the protection market, which 39 per cent of advisers expect to improve towards the end of 2008.

"A further 38 per cent expect protection sales to stay flat, so it is not all doom and gloom."