The lack of credit available to households is a trend which is likely to continue, says Capital Economics.

During the first quarter of 2008, lenders reduced the availability of both unsecured and secured credit, according to the Bank of England's Credit Conditions Survey.

The report also revealed that this will continue to decrease during the second quarter.

Vicky Redwood, Capital Economics UK economist, said this is affecting households in a variety of ways.

"On the mortgage side it is … requiring borrowers to have a bigger deposit than before if they take out a mortgage and then paying higher mortgage rates," she explained.

People will also find their chances of obtaining a credit card are reduced, she added, stating that for those who can get one, their limits are likely to be lower.

Ms Redwood warned that the interest rates on both credit cards and personal loans have increased, making the cost of borrowing more expensive.

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