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As the crunch goes on, lenders are rejecting applications - and mysteriously dragging their feet over some sub-prime loans.

Banks and building societies are set to tighten their belts further in the wake of the global credit crunch, making it increasingly difficult for borrowers to be approved for mortgages, loans and credit cards.

A series of reports last week suggest that financial institutions will feel the squeeze on their balance sheets well into next year - a squeeze more prolonged and more damaging than had previously been thought.

Over the past month, mortgage lenders have withdrawn 40 per cent of their sub-prime mortgages - loans made to borrowers with poor credit histories - and 16 per cent of their standard home loans.

Many of those standard loans were aimed primarily at first-time buyers who were stretching their finances to afford a home.

A rise in the number of fraudulent insurance claims in the UK is costing the industry an estimated £1.6bn a year and pushing up the price of cover for honest policyholders.

The Association of British Insurers (ABI) said that, between March 2006 and March 2007, one in every 11 claims was in some way fraudulent, reports The Guardian. Insurers uncovered dishonest claims worth £1.3m a day – three times the figure in 2003 – but the ABI said it believed false claims worth an additional £1.6bn were going undetected each year.

Insurance fraud was adding about 5%, or £40 a year, to premiums paid by honest policyholders. However, Nick Starling, director of General Insurance and Health at the ABI, said the industry was getting better at detecting fraud.

Plans to help borrowers secure more affordable rates for long-term fixed-rate mortgages, announced in Alistair Darling’s pre-Budget proposals, are unlikely to increase demand significantly, experts say.

“Mortgages of up to 25 years have been available for some time but are not very popular, as they are obviously not a very flexible contract to be in,” said Richard Farr, director of the Association of Mortgage Intermediaries.

“They have little impact on helping people on to the property ladder, as they do not address issues of affordability.”

In the past few months Halifax, Nationwide, Norwich and Peterborough and Yorkshire building societies have all launched 25-year fixed-rate mortgages but long-term deals still make up only a fraction of mortgages brokered.

Fixed-rate deals offer borrowers a guaranteed rate of interest for a set period of time with two-year fixed rates currently the most popular product on offer on the market. Long-term fixed rates, by comparison, are higher than those offered for short-term deals in order to reflect the increased risk taken on by the lender but advisers say that this is not the only reason they are unpopular.

Many borrowers, they say, find it difficult to make plans that exceed a few years and are, therefore, unwilling to tie themselves to long-term deals that penalise them for altering their arrangements.

“The government seems to be focusing on supply and ways to make it easier for lenders to offer long-term products,” said James Cotton, mortgage specialist at London & Country Mortgages. “But the industry should be looking at demand. Offering more products is not going to solve the problem.”

Fitch Ratings said its outlook for the UK life insurance sector remains stable as problems persist in spite of strong capitalisation and record new business volumes.But the rating agency said it welcomes the strong new business growth since the UK pension reforms in 2006.

Nonetheless, the ratings agency said it is concerned that this one-off expansion masks high lapse rates that are, in general, not clearly disclosed.

Fitch said for many of the new policies sold, existing policies have been terminated, as policyholders simply switch money from old to new policies.

The UK Financial Services Authority proposed a further shake-up of life insurance distribution in a discussion paper published in June 2007.

This, together with the introduction of US-style variable annuity products, may lead to significant changes for the UK market in 2008 and beyond, the ratings agency said.

On the impact of the volatility in the credit and equity markets in the wake of US sub-prime woes, Fitch said the volatility does not currently appear significant enough to put material pressure on its UK insurance ratings.

The second quarter of 2007 saw a continuation of the UK consumer credit market’s poor performance, a trend that began in 2005. In particular, high levels of consumer debt and a lack of consumer confidence hampered new business levels. Moreover, interest rates remained high.The majority of product lines struggled in the second quarter of 2007. This is particularly true of unsecured personal loans, which have performed poorly since mid-2004. The credit card segment continued to see a weak performance, but Q2 2007 was stronger than Q1 2007. On the other hand, overdrafts put in another strong performance.

Lending will be affected in the short term as a result of the global credit crunch. Indeed, in response to the crunch and a lack of funds on the money markets at low rates, lenders are beginning to raise their prices. Moreover, many lenders will implement stricter criteria and reduce exposure to the sub-prime and non-standard sectors.

Banks and building societies have withdrawn 40 per cent of their mortgage deals over the past three months, as the credit crunch takes its toll on people trying to buy a home.

It is the latest sign that lenders are tightening their loan offers in an attempt to recover lost profits following the turmoil in the financial markets.

In total, 5,511 different home loans have been withdrawn since July this year, as many banks and building societies have struggled to borrow money in the wholesale markets.

This has increased their costs - which they pass on to their customers, by withdrawing their best deals or raising rates.

According to independent statisticians Moneyfacts.co.uk, the fall in the number of products on offer is steepest in the subprime sector, as banks and building societies have stopped offering home loans to people with poor credit histories.

But it said the mainstream lending market had not escaped the cull as lenders took a more cautious approach across the board.

Melanie Bien, from mortgage broker Savills Private Finance, said: “It’s not just a problem with subprime or buy-to-let any more. It is beginning to filter through to the mainstream market.

“There is just less choice out there. And with less choice it is tougher for people to find a loan.”

The research from Moneyfacts.co.uk comes just a few days after website MoneyExpert highlighted that one in three home buyers had been rejected for a mortgage in the past six months - a sharp increase on the year before.

The mainstream mortgage market has seen a 16 per cent drop in the number of products available, which Moneyfacts said was unusual in a historically static market.

Mortgage lending without buying life cover has created a £2.3 trillion protection gap, an industry expert said today.

Claire Moyles, a spokesperson for Sainsbury’s Bank, said anyone aged 18 or over should seriously consider buying cover for their mortgage and family.

One in three Britons have no life insurance, according to ABI.

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“There’s a £2.3 trillion protection gap in the UK so there’s a massive amount of underprotection. It’s obviously not top of everybody’s agenda,” Ms Moyles said.

“Part of the reason the gap exists is because people are taking out a mortgage without any life insurance.”

She also advised young people to shop around to obtain the best deal, as premiums can vary a lot for lower age brackets.

ABI figures show that between 2005 and 2006, £41,168 million was paid on premiums for life insurance, while £45,469 million was given in life insurance benefits.

Millions of UK consumers are likely to switch their credit card provider over the course of the next 12 months, according to a study commissioned by Abbey recently.

The average amount of money expected to be transferred by credit card users in this way is around £1,710 and it is anticipated that more than 6.5 million people will make the switch during the coming year.

Interest free balance transfers periods are thought to be the biggest attraction for credit card users looking to switch providers, followed by cashback offers, Abbey reports.

Close to 29 per cent of prospective credit card switchers told the financial services firm that they were looking to benefit from a period that they would not have to pay interest on new balances, while six per cent wanted a credit card that offered more “kudos”.

Roger Lovering, managing director of Santander Cards, said: “These figures just show the intense competition in the credit card market.

“With £11 billion at stake, it’s the credit card with the best deal that wins.”

Abbey revealed recently that UK consumers intend to borrow around £1.4 billion to fund cosmetic surgery procedures of various kinds.

According to new research published today by AA Pet Insurance when it comes to naming our pets, we continue to be inspired by drinks, BUT.. the latest misfit star Britney also makes a strong showing in the top 100.

AA Insurance says it examined the policies of over 6,500 insurance customers to establish the inspiration behind the names of British dogs and cats.

Although children’s names are a big influence with Jack and Jess a top choice for both species, the research revealed a myriad of unusual trends for names:

Some confused pet owners have named their cats and dogs after other animals, says the insurer, including Pig, Frog, Horse, Lion, Mouse and Tortoise.

Celebrity culture has also been a great influence. Apart from Britney, stars such as Tyson, Posh, Misteeq, Elvis, Bono and Mika make an appearance.

The influence of booze is as strong as ever with: For dogs, favourite Irish tipples Guinness and Baileys make the top 100, whilst Brandy tops the charts for cats.

The classic 60s cartoon, the Flintstones is a rocking source of inspiration, says the AA, with Bam Bam, Pebbles, Fred and Barney all appearing in the top 100. British favourite Only Fools and Horses also sparked some ideas with Del Boy and Rodney featuring in the top 100 cat names.

Finally, sugary snacks and biscuits are a big inspiration for pet owners with Chocolate, Fudge, Chips, Cookie and Custard all appearing in the top 100.

..My retro’ friend has just acquired a gorgeous Manchester Terrier. He is begining to respond to his given name of ‘Trevor’.. which I am happy to say, in so-much as I know anything, has nothing what-so-ever to do with East Enders.

Despite a recent hit in confidence in the mortgage and financial markets the fundamentals of the UK mortgage market are very sound according to the Intermediary Mortgage Lenders” Association (IMLA).

Peter Williams, executive director of IMLA, says: “The turmoil in the financial and mortgage markets was attributable not to an actual problem with the credit quality of UK mortgage books, but concerns among investors that UK lenders could encounter the same problems as have occurred in the US. That ignored the fact that the credit quality of UK mortgages remains very good.”

Mr Williams added that while house price inflation is falling and will continue to do so into 2008, aggregate demand continues to exceed supply.

Indeed, IMLA said recent RICS figures that indicate that house prices are beginning to cool should not be interpreted as an early indication of a house price crash

Employment remains high, interest rates remain historically low - despite recent volatility - and the economic backdrop remains positive,” Mr Williams said.