By Tony Booth

Many banks and building societies have already tightened their belts and are now clearly much more restrictive over who they will lend to and how much they will lend; while others have sought to earn from borrowers by increasing fees as well as interest rates.

A new kind of financial market is starting to establish itself and lenders are separating into different camps, targeting particular types and divergent groups of customer.

The quarter per cent reduction in the base rate by the Bank of England at the end of last year has not done enough to re-establish confidence.

Some lenders have yet to pass the interest rate drop on to borrowers, while others have reduced the headline rate of their products but have then deviously increased the fees associated with them - thus giving with one hand and taking with the other!