Recent reports show that there is a shortage of money being lent to the property sector since the credit crisis caused many traditional banks to close their books, particularly for mezzanine debt finance which is perceived as among the more risky parts of the lending market.

With prices far below their peak last summer, some investors are now looking for opportunities to return to the market. However, they are being stymied by a lack of cheap debt creating the conditions for lending at profitable rates on re-priced income-producing property.

A former head of real estate banking at NM Rothschild, Andrew Radkiewicz, announced the unveiling of a UK-listed investment company focused on debt finance for European property, in the latest attempt to exploit the retreat of commercial banks from the sector.

Reports suggest that there have been a number of private equity and unlisted fund launches in recent months and Rocksburgh Capital will be the first listed vehicle focused on the mezzanine debt market since the property boom ended last summer.

However, analysts say that individuals struggling with bad debt should do everything in their power to improve credit ratings. According to personal finance experts Moneynet.co.uk, credit is only available to those with good ratings so anybody with a “poor” rating will see this negatively impact their applications.

Industry sources are of the opinion that lenders do not care if you are a graduate or a dustman, they will be reluctant to raise credit limits to those with bad records no matter what their earning potential. Richard Brown, chief executive of the research firm said: “At the moment, lenders are only really lending money to people who are demonstrating that they can repay it, so the ground rules have changed dramatically.”

Credit Action reports also shows that the nation’s repayments have soared to £94.3 billion over the past year and the average annual interest paid by each household on their total debt is £3,790, up by almost 10% in the last 12 months.

Women (50%) and the 35-44-years-old age group appear to be more worried about their financial predicaments as the cost of living soars. According to Owen Roberts, a spokesman for Callcredit, the rising costs of fuel and food as well as falling house prices are primary causes of the concerns.

He said: “It appears that people are most concerned about short term survival in light of spiralling costs, and many can’t see the situation improving over the coming 12 months.” This week shadow chancellor George Osborne claimed that the British public is addicted to debt and the problem needs to be addressed urgently.

uSwitch.com also says that more than £17 billion has been lent via 4.8 million credit cards during the past year without proof of income or outgoings. A new survey released by the website found that of these cards, more than three quarters were issued by lenders other than the applicants own bank, meaning they knew little about the customer’s spending habits.

Statistics show that nearly half of Brits fear they will fall into debt over the next 12 months, one new survey has found.