Homeowners expect downturn to last until 2010

The global economy was seen as being to blame for the crunch although mortgage lenders were also picked out by a quarter.

Almost half expected that house prices would fall by more than 15%, equating to a drop of almost £30,000 off the average house price.

Although many respondents had a gloomy outlook they are taking positive action to defend against rising outgoings and more than 70% had already made cost cutting decisions. The biggest impact has so far been that of food, utility and fuel costs rather than increased mortgage rates.

Richard Morea, technical manager at L&C commented, "Homeowners are catching it from all angles not only with higher mortgage rates but increasing fuel, food and energy costs. It's unsurprising that they are demonstrating a siege mentality, budgeting hard and cutting costs in as many areas as possible."