The era of cheap mortgages is over, senior Treasury officials said yesterday, as consumers were warned that the financial crisis will affect Britain for at least another year. Daily Telegraph

As the US Federal Reserve took the drastic step of cutting interest rates by three quarters of a percentage point to combat the downturn, home owners were told by civil servants to expect continuing turmoil until 2009.

The Fed’s move — the second such drop this year — came amid further signs that British householders are experiencing significant strain as a result of increasing bills.

Rising mortgage costs have forced millions of people to seek help to meet the costs of their household bills. Inflation is running at its highest since last June, affecting the chance of the Bank of England cutting interest rates.