Council of Mortgage Lenders warned that the mortgage lending would decrease further if Bank of England does not provide more financial help to the building societies and banks. Steven Crawshaw, chief executive of Bradford & Bingley and the chairman of CML stated that the banks and other societies may have to halve their mortgage lending this year if the credit crisis continues. Banks have become cautious of loaning to each other due to the sub-prime crisis and now they provide loans only at higher costs to other banks.

As a result, the smaller banks are passing this cost to their clients by indirectly raising interest rates. Also, they are not keen to lend to those who don’t have huge deposits. So, the CML predicts that if this situation continues, then the mortgage lending may worsen further. Bank of England provides billions of pounds of loan each month to banks and building societies. Now, the lenders are requesting the bank to provide more long-term loans at least for a period of two years. The CML said that if BoE does not provide the required loans, then the 108 billion pound mortgage market may shrink to almost 60 billion pounds.