London (shakespearefinance) 5 January, 2008: The households and commercial borrowers are likely to face tightening credit conditions as a result of the credit turmoil that started at the end of the last year.  
 
The quarterly Credit Conditions Survey from the Bank of England presents a gloomy picture of the financial markets in the UK. The global credit crunch is likely to worsen into 2008 as financial institutions become less willing to lend out funds. The Central Bank said that the ‘reducing risk appetite of the lenders’ was a contributing factor for the reduction in both secured and unsecured loans to households in the last quarter of the year 2007.  
 
The rigid credit conditions are expected to continue in 2008 as well as the banks are still reluctant to lend money amid high borrowing costs and scarce availability of credit. The survey also shows that lenders are expecting a rise in mortgage defaults and demand for home loans to fall in the coming months. At the same time, some experts have questioned the survey's gloomy outlook in view of the recent thaw in global money markets.  
 
Anyhow, there is a strong case of further interest rate cut. The findings of the survey from the Bank of England only bolsters the case for further interest rate cuts to shore up the economy. Earlier, in the first week of December 2007, the Bank of England cut interest rate to 5.5 per cent.