Loans in June were 67% down on the comparable figures for last year,have fallen for 14 consecutive months and are at their lowest level since 1993.
The only good news is that the cost of deals for new mortgages is finally being cut.
This is essentially the nadir of the credit crunch which has seen funding effectively dry up in the Western economies.Sir James Crosby's report is gloomy sand says that this shortage of finance will remain until 2010.
For the economy this will mean continuing depressed house prices and the associated lack of consumer confidence.Where does this then leave the government?
The answer is in a tricky position.It initiated the Crosby review and will find it difficult to shy away form its recommendations.
These are that
1. industry-led initiatives to develop a consistent, high-quality mortgage-backed bond to create a "gold standard" bond attractive to investors
2. the Bank of England could extend its existing special liquidity scheme to encourage new issuance of mortgage-backed bonds although Crosby notes it is "debatable" how much help this would be
3. the Financial Services Authority could tackle "regulatory distortions" between banks, building societies and investment sectors
4. a government guarantee to transfer the risk of investing in mortgage-backed bonds from investors to the government.
But Alistair Darling will find himself caught between a rock and a hard place.Political pressure on Gordon Brown means that he will have to be seen to be doing something.However how can the government support a scheme that will essentially be securing taxpayers money against falling assets and increase government borrowing.
There is also the issue of Northern Rock,a company that no longer wants any domestic mortgage business.Its activities are damaging the market as it offloads mortgages in order to repay back the loan from the government.
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