Caroline Flint was photographed with the notes as she went into the meeting, but after the revelation that the notes had been seen she simply stated ‘These things happen’. She went on to state that the notes did not contain firm forecasts but only predictions. The government has said that the information in the report is only the same as that already voiced publicly by senior government officials.

However, the ‘leaked’ notes have provided the opposition with a weapon, with the shadow housing minister stating that they reflect the “incompetence at the heart of government”. He said that the government was telling the public one thing whilst secretly predicting the exact opposite.

The notes referred to predicted house prices falls, and read: “given present trends they will clearly show sizeable falls in prices later this year - at best down 5-10% year-on-year”. It also referred to a slowdown in house building, reading: “House building is stalling. New starts are already down 10% compared to a year ago. House builders are predicting further falls. Having seen net additions reach roughly 200,000 in each of the last two years, the figure for 2008-9 is almost certain to be well down on that.”

The information comes from a government funded report. The report claims that this action is being considered because the growing number of people looking at acquiring a second home in the country are actually spoiling some of the UK’s rural beauty spots for the sake of a property that will remain empty for most of the year. Officials say that the home being empty for the best part of the year also hurts local businesses such as shops, restaurants, and pubs, because there are no permanent residents to make use of these businesses.

The report was put together by the Liberal Democrat MP Matthew Taylor, who said that the government needs to take steps to crackdown on planning. The new regulations, if they come into force, would mean that those wanting to buy a country hotspot that is currently occupied full time for use as a holiday or weekend home would have to get planning permission to get the use of the property changed from a permanent property to a holiday property or second home.

However, the plans were attacked by Tory officials, with one spokesperson stating: ‘Requiring planning permission for second homes would be intrusive and difficult to implement. This is a recipe for negative equity. The last thing the housing market needs at the moment is more government red tape.’

This latest drop ion house prices has also resulted in the lowest annual decline since the early 1990s, with house prices now 4.4% lower than they were this time last year. Between April and May the average house price in the UK fell by around £5000 according to figures. However, whilst prices are now lower than they were this time last year they are still 5% higher than they were two years ago and 10% higher than they were three years ago.

One economist stated: ‘The plunge in house prices in May is a real shock, and will fuel concern that we are now headed for a sharp correction. The downward pressure on house prices coming from stretched buyer affordability and tight lending conditions is increasingly biting. It now looks more likely than not that house prices will suffer double-digit falls both this year and in 2009.’

He added: ‘Clearly, a sharp housing-market correction would add to the already serious risks to economic growth, particularly through weighing down on consumer spending.’ An official from Nationwide said: ‘Falling house prices combined with higher inflation make the MPC’s decision more difficult. Stronger-than-expected inflation appears to have shattered hopes of an early cut in the Bank rate in June, but more downbeat economic and housing-market data could lead more MPC members to vote for pre-emptive cuts.’

The new Banking Code applies to building societies as well as banks, and means that consumers could enjoy greater levels of assistance and help from their banks.

The voluntary Banking Code will benefit consumers in a number of ways. Banks will have to adhere to more responsible lending regulations, offer advice on fraud prevention, identify those heading towards problem debt levels and contact them, help customers that want to switch their current account to another provider, and offer more information to customers about cheque clearance times. There are a number of other requirements in the new code.

One official from the British Banker’s Association stated: “This new Banking Code gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties. People do panic when their money starts to go wrong; if they leave it alone it just gets worse. The long consultation process, now complete, has shown clearly what customers want and expect from their banks. That has been the driver for these changes.”

However, some officials, such as those from the consumer campaign group Which? stated that more needed to have been incorporated into the new Banking Code, such as increased minimum repayment limits on credit cards to get consumers out of debt faster.

One official from the consumer campaign group stated: “A lot more could have been done to really benefit consumers.”

Many banks and lenders have had to cut the range of deals that are on offer to mortgage customers over the past year, and the number of total mortgage deals has fallen by around two thirds.

Consumers that are looking for a mortgage these days face a range of problems. First of all lenders have been hiking up interest rate despite the base rate cuts from the Bank of England. This has resulted in lack of affordability for borrowers.

Many mortgage lenders have also increased the size of the deposit that they require from borrowers, which has also reduced affordability for borrowers, with first time buyers suffering more than others due to having no previous property from which to take equity to put towards a deposit.

One industry official recently stated: “If you’ve not got a substantial deposit nowadays or equity in your house then your choices are now severely limited. On average if you are remortgaging you now need a deposit of 15.5 per cent if you take out a fixed or variable mortgage.”

With lenders continually tightening their lending criteria as a result of the global credit crunch, and increasing number of people have found it more and more difficult to get the mortgage that they need at an affordable rate, and this has had a sever impact on mortgage approval levels over the last couple of months.

Negative equity is a term that has not been widely used for the last ten years, as a result of house prices in the UK rocketing to astonishing levels, leaving homeowners with plenty of equity in their homes rather than being in negative equity.

However, industry officials claim that all this is due to change. The report claims that around three million homeowners could find themselves plunged into negative equity by next April.

An MP from the Liberal Democrats said that the figure, which was predicted by city analysts, was a ‘highly plausible’ one. With the doom and gloom relating to house prices due to get worse, this could leave people facing a similar situation as in the early 1990s, where many found themselves in negative equity.

Many lenders have scrapped their cheaper mortgage deals in light of the global credit crunch, and recently the range or mortgage deals dropped by an amazing 10% in the space of just twenty four hours.

In total it is estimated that the range of mortgages has fallen by 70% since last summer, when the credit crunch began to take hold in the UK, and this has made it difficult for consumers to get cheap mortgage deals.

In addition to this house price growth ash plummeted, and is set to continue to do so, with some industry professionals even predicting that house prices in parts of the UK could actually tumble by up to 20% over the next two years.

One of the moves made by the bank mirrors moves made by other banks – to reserve best buy mortgages for those with higher deposits to put down whilst offering the worst interest rates to those with a lower deposit.

Anyone with less than 25%b to put down on a deposit will not be able to get one of the most competitive mortgages from Abbey. The bank has also scrapped tracker based deals altogether for those that do not have 25% or more deposit.

Abbey officials also said that they plan to stop selling buy to let mortgages through brokers. They will, however, still be available direct from the lender.

One official from Abbey said: ‘Abbey’s new range includes a 75% LTV range which rewards customers with 25% or more equity in their property with lower rates. This gives customers and brokers access to rates that are up to 0.25% lower than in our previous range. We still offer loans of up to 90% and 95% LTV.’ He added: ‘The changes reflect the continuing market conditions, recent competitor moves and our commitment to maintain service levels. They are in line with the rest of the industry and we will continue to monitor the market.’

On a lighter note, however, the bank has also added that it has cut the rates on its tracker and flexible mortgages, as it is anticipating a fall in the cost of funding between banks.

This will create a challenge for other lenders, and could result in more lenders looking at passing on the base rate cuts and reducing mortgage interest rates for borrowers.

The nation’s second largest mortgage lender, Nationwide, has announced that borrowers will now have to put down at least a 10% deposit on all but two of its mortgage products.

This spells more bad news for those on low incomes and first time buyers, who struggle to raise the traditional 5% deposit let along the higher deposits that many lenders are now demanding.

Apart from two fixed rate and tracker deals borrowers will have to stump up 10% of the value of the property to Nationwide in order to qualify for a mortgage.

One variable rate deal for new borrowers will require a massive deposit of 25%. The changes are due to come into force at the beginning of May. New borrowers will also no longer be able to borrow more than £500,000 from Nationwide.

The changes will apply only to new customers, with existing Nationwide customers not being affected by the changes.

One official from the Nationwide said: “These changes will allow us to maintain control of the volume of business the society is attracting, while enabling us to continue offering our full range of mortgages to our existing members in a controlled and prudent way.”

An industry official said that getting a mortgage was getting more difficult. He said: “The biggest struggle now is not being able to afford a mortgage - it is being able to get one. Availability is the biggest hurdle despite all the Government efforts to get lenders lending.”

He added: “First-time buyers and people renegotiating their mortgage for the first time will be worst affected. When disposable income is already at breaking point for many, it is frankly impossible to see how those with limited savings will find a way to get a foothold on the property ladder.”

Lenders have found it more and more difficult and expensive to secure finance to fund their lending, and consumers have seen the cost of mortgages rocket despite three base rate cuts, as well as seeing tighter lending conditions, fewer mortgage products, and increased difficulties in being able to get a mortgage.

A recent report has suggested that the problems may be even worse than anticipated, as a shocking report has shown that those looking to take out a mortgage or remortgage could be facing set up fees of up to £5000 in some cases.

A new deal called Rate Matched from HSBC, which matches the cheap fixed rates that many consumers are due to come off over the coming months within specified limits, charges up to £5000 by way of an arrangement fee.

The report also shows that the arrangement fees on other mortgage have close to doubled over the past year. Figures showed that in March last year the average set up fee for the most competitive three year fixed rate mortgage was £578 but this has now rocketed to £1132 reflecting a 96% rise. Two year fixed rate arrangement fees have gone from an average of £999 to an average of £1478.

One industry official said: ‘After all the panic of recent weeks in the mortgage market, people may be tempted to grab the best deal they can and focus on rates to the exclusion of everything else. They could be in for a nasty shock when it comes to the fee which is charged as they have rocketed in the past year.’

In a recent report it was claimed that the lending giant was considering suspending lending at its UK subsidiaries, Preferred Mortgages and Southern Pacific Mortgages.

It was also confirmed that amidst this speculation that some of its mortgage loan operations would suspended, the Lehman Brothers was also closely considering withdrawing from the UK market.

Last month the lender confirmed that around two hundred jobs across the UK were to go as it scaled back on operations. During last year Lehman Brothers closed its Southern Pacific Personal Loans operation, and its London Mortgage Company brand.

In fact, report suggest that Lehman Brother could announce their withdrawal from the UK market as early as the beginning of April, and industry officials have stated that officials from both Southern Pacific Mortgages and Preferred Mortgages have stated that they could be closing their doors in the very near future.

Many lenders have suffered as a result of the credit crunch, with many having to withdraw a range of deals from the market, as well as increase stringency over eligibility requirements or raise interest rates further in a bid to try and put off new customers.

This is because the difficulties they have faced in getting finance to fund their lending has resulted in funds starting to dry up for many. This has made it very difficult for some groups, such as first time buyers and those with poor credit, to get the finance that they need.