Lenders yesterday told Alistair Darling that they could not throw an immediate lifeline to beleaguered mortgage holders by passing on cuts in the base rate – and warned that repossessions could rise in the coming months. Financial Times, The Times, Daily Telegraph

The comments came when Mr Darling, the chancellor, met the Council of Mortgage Lenders and the Finance and Leasing Association to discuss ways of bringing down the cost of home loans, which has risen steeply as a result of the credit crunch.

The CML told Mr Darling that action taken on Monday by the Bank of England – opening a new £50bn facility for lenders to swap mortgage-backed securities for gilts – would help ease the crisis.

However, it would not reverse the new-found aversion to risk by banks which has led to a tightening in lending criteria at the expense of low-income borrowers and buy-to-let investors.