The UK mortgage market is expected to shrink by nearly 20% this year as the credit crunch continues to take its toll on lenders, according to a report.

Market analyst Datamonitor said the outlook for the UK lending market was bleak, with the ongoing problems caused by the credit crunch leading to fewer lenders operating, a shrinking number of products, higher prices and more consumers being refused credit.

The group predicts mortgage lending will fall by 19.3% during 2008, with total advances of £293.55 billion made during the year.

The figure is in stark contrast to growth of 19.7% recorded during 2006 when the market was booming, while advances rose by a further 5.4% in 2007 to peak at £363.8 billion.

Official lending figures from the Bank of England have been showing a steady decline in mortgage advances since the beginning of this year as the problems caused by the credit crunch intensified.

* The deepening toll from the global financial crisis could trigger the failure of a large US bank within months, a respected former chief economist of the International Monetary Fund has said.

Professor Kenneth Rogoff, a leading academic economist, said there was yet worse news to come from the worldwide credit crunch and financial turmoil, particularly in the United States, and that a high-profile casualty among American banks was highly likely.

“The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come,” Prof Rogoff said at a conference in Singapore.

In an ominous warning, he added: “We’re not just going to see mid-sized banks go under in the next few months; we’re going to see a whopper; we’re going to see a big one — one of the big investment banks or big banks,” he said.

* The  residential construction industry in Northern Ireland is facing “catastrophe” unless an agreement can be reached to urgently free up the flow of cash in the housing market. The warning came from Brendan Cunnane of the Construction and Property Group which represents a variety of firms within the sector from builders to estate agents.