The Council of Mortgage Lenders (CML) has said that the findings of a recent Bank of England report into credit conditions in the UK are "encouraging" for the mortgage market.

In its Credit Conditions survey for quarter three of this year, the Bank said that although lenders reported they had lowered the amount they allowed customers to borrow on an unsecured basis, the amount of secured loans they had issued had been steady and looked set to remain so.

Michael Coogan, the director general of the CML, said: "Although this survey was undertaken before the Northern Rock situation emerged, the funding constraints arising from the slowdown in the inter-bank lending market were already apparent.

"Against this backdrop, it is encouraging to see that the lenders contributing to the Bank survey largely expect the supply of mortgage lending to hold up," he added.

Despite recent financial turmoil, the Bank also said that fewer people had defaulted on their loans, something which may come as a comfort to lenders who had worried the UK could find itself in the grip of lending crisis similar to the one in the US.