The credit crunch continues to have a rotweiller like grip on the home loans market as lenders remain cautious about offering mortgage products.

The current lack of liquidity between lenders is having a serious effect on the housing market as would-be new homeowners struggle to find home loans. With the number of people able to get mortgages dropping considerably month on month, there are just not enough home buyers on the market meaning that house prices are dropping as a result.

In fact the future for homeowners over the next few years looks pretty bleak according to Halifax, Britain’s largest mortgage provider. HBOS, the Halifax’s parent bank has warned that homeowners could feasibly expect to see up to two years of falling house prices.

Andy Hornby, chief executive of HBOS, said earlier this week that it was "inevitable we will have a couple of years of modest [house price] declines.'' HBOS said it was expecting a fall this year of about 5 per cent or "mid single digits", having forecast a low single digit drop earlier in April and a flat market before that.

Martin Ellis, chief economist at Halifax, confirmed those predictions today but warned that homeowners in certain regions would face far sharper falls in the value of their homes.