Credit Crunch to “last into 2010”

The UK’s largest mortgage provider has today said that they believe the credit crunch will last well into 2010.

Andy Hornby, HBOS Chief, said it would take 18 months before the US house prices started to rise again. That is what is needed for banks to gain confidence and start lending again. It was suggested that there was little the UK government could do to stimulate the markets and that it would be a waiting game for the market to turnaround.

Hornby stated that British banks would struggle to offer bank loans until they could raise significant sums on wholesale financial markets. Around two – thirds of wholesale funding by British banks came from the US so until the problem gets better over there the UK will be in a rut.

Confidence is weak at the moment for UK banks and therefore there is a great concern for the lending of money.