Since the collapse of Northern Rock in 2007, businesses and individuals have found obtaining credit far more difficult than it was before. After the mess that was created by the sub-prime mortgage crisis in the US, banks have become a lot stricter about who they lend to, making credit less easily available.

This year, the situation may be about to get even worse, according to the Bank of England; lenders are more concerned about the eurozone now than they were about the failure of Lehman Brothers in 2008.

The crisis in the eurozone may force banks into a more cautious position, making it harder for companies and households to borrow money.

Just this week, the European Central Bank had to take steps to support banks that have been reluctant to lend to one another.

The Bank of England has warned that: “Developments in the euro area and their impact on banks’ funding conditions would be a key determinant of credit availability over the coming quarter.”

Lenders have already reported that, in the final months of 2011, demand for loans from SMEs fell sharply. Banks anticipate this trend will continue over the next few months. In the final quarter of 2011, demand for loans amongst bigger companies remained steady, but a drop is expected in 2012 Q1.

One area where credit availability may improve is mortgages, thanks to schemes which allow lenders to offer higher loan-to-value mortgages with support from house builders. If house prices fall or the economic outlook gets worse, however, this will have an impact on mortgages.