These factors are bound to heighten concern over the state of the economy following a raft of data showing that a sharp correction in the realty prices is already damaging consumer and corporate confidence. Lenders resorted their confidence on the housing market. However the prices took a U-turn. Apart from this, the changing economic outlook and changes in attitude for risk have contributed to the decline in credit availability in the UK.

Many lenders are expecting that these factors will contribute positively to the tightening in credit availability over the next three months. This survey was conducted between May 27 to June 18. The survey has also showed that the default rates on secured lending to households rose by more than anticipated in the second quarter of 2008 and the lenders expect a further increase in the coming quarter. Lenders also apprehend that corporate defaults will pick up and that's why they are ready to tighten loan terms further.

There is unexpectedly large falls in demand for credit for mergers and acquisitions activity and capital investment, and from the commercial real estate sector. These factors are going to make credit availability more tighter.

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