In a reference to the struggle of millions of homeowners to get a loan, he said: 'We have, in effect, returned to mortgage rationing.'

He also said the Government's £ 37bn banking bailout was not enough to stop the crisis.

He accused the Government, the Bank of England the Financial Services Authority of making 'piecemeal, selfinterested decisions'. Mr Coogan added: 'Unless Government takes further targeted action to help market participants, we will see a worsening picture next year compared with this.'

If they want to solve the crisis, he said, there needed to be a better Government guarantee to encourage lending between banks.

The Council of Mortgage Lenders expects a paltry amount of net lending this year of just £40bn, a fraction of the £108bn handed out last year.

His comments came amid a growing storm over controversial but little-known clauses in many homeowners' tracker mortgages, known as 'collars'.

These stop the mortgage falling below a certain rate.

Around 10% of the market have these and may not benefit if the Bank of England slashes the base rate again on Thursday. But speaking at the CML's conference, a director of the City watchdog said lenders may not be able to enforce these collars because they could be 'unfair.'

Unless the existence of the collar was made sufficiently clear to the borrower when they took out the mortgage, the lender may not be able to enforce it.

Jon Pain, managing director of retail markets at the Financial Services Authority, said the collar should have been mentioned in the Key Facts Illustration (KFI) given to all customers.

This contains the crucial information about the loan which they are about to take out, and is meant to spare them from trawling through all the terms and conditions.

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