Credit crunch to last until 2010

The head of the UK's largest mortgage provider has warned that the credit crunch could last until deep into 2010.

Andy Hornby, HBOS chief executive, said it would take at least 18 months before US house prices started to rise again and banks had enough confidence to begin lending to each other again.

In an interview with the BBC's Leading Questions programme, Hornby said British banks would be unable to offer loans until they could raise substantial funds on wholesale financial markets, the majority of which are funded by the US.

The reluctance of banks to lend to each other since the onset of the credit crunch is the main reason behind the fall in the housing market and the knock-on effect that has hit other industries such as construction, surveying and home furnishings.