Research from the firm has revealed four out of 10 mortgage brokers expect liquidity levels to get worse in 2008 with 13% expecting the situation to deteriorate significantly. Only 26% believe liquidity issues will ease this year.

As a result, nine out of 10 brokers expect mortgage products to be pulled and two thirds expect lenders to stop offering new products altogether. In addition, eight out of 10 brokers surveyed expect lenders to widen the gap between their rates and the Bank of England Base Rate.

The mortgage market may also see an increase in merger and acquisition activity, according to 37% of mortgage brokers polled.

Andrew Clinton, managing director of Protiviti’s Financial Services Industry practice, commented: “Banks and building societies are not surprisingly reviewing their lending criteria and overhauling their risk management programmes in the light of the current market and economic situation with the aim of reducing their exposure to bad debt.”