The warning is contained the Bank of England’s latest Credit Conditions Survey, which says that the availability of home loans between now and September will be even lower.

Mr Darling tried to sound confident today about longer-term prospects, as a result of the Bank of England providing extra funds for the banking sector, but a revival in lending depends mainly on confidence returning to the international financial markets - which is out of his hands.
  
The Bank expects the demand for home loans to fall in the coming three months, after it fell by more than mortgage lenders had calculated between April and July. Lenders will in any case be asking for bigger deposits in the next few months.

The number of people defaulting on their mortgages also rose by more than lenders had expected in the past three months, the Bank said.

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