The increase in the number of people defaulting on loans is expected to rise even further within the next few months, a survey has found.

According to a survey by the Bank of England, an increasing number of Brits are struggling to repay loans, mortgages and other debts.

The survey also found that business lending had also failed to meet their expectations of lending increasing in the past three months.

However, according to financial institutions, the availability of loans to businesses within the next three months is expected to increase.

Vicky Redwood, of Capital Economics, said: "The survey gives no indication of how much lending might rise by.”

She said the survey was "not overly encouraging about the outlook for bank lending.

We continue to doubt that lending will rise by enough to support a strong and sustained recovery in the wider economy."

The demand for home loans however, had increased bringing a positive shine onto the housing market.

Yet Colin Ellis, European economist at Daiwa Securities, said: “While there are some encouraging signs in the credit conditions survey, the UK is certainly not out of the woods yet.”

Paul Samter, economist for the Council of Mortgage Lenders (CML), said: "A rapid return to pre-credit crunch lending volumes and products remains extremely unlikely."