By Ian Pollock
Personal finance reporter, BBC News
Mortgage rates have been headline news for the past year
The average building society in the UK appears to be lending only a handful of new mortgages to home buyers.
Recent figures from the Bank of England suggest that in June, societies other than the giant Nationwide, approved an average of just 15 new loans for house purchase each week.
A year ago, in June 2007, that figure was 34 mortgages each per week.
Some smaller societies with just a few branches have almost stopped lending to home buyers altogether.
The size of societies ranges from several with just one branch, to the much larger Britannia with 254.
"I don't think they have shut up shop," replies Neil Johnson of the Building Societies Association (BSA).
"But they are lending in a different way to the way they did previously.
"For some of them that is a conscious decision they may have taken; it is not necessarily a bad thing in the current market."
Building societies are in a different boat from banks.
They must rely on savers' funds to provide at least 50% of their lending, and have not been hit as hard by the disappearance of wholesale funds on the financial markets.
Unlike some banks they have not been forced to withdraw almost entirely from new lending.
Open for business
The BBC contacted a selection of big, medium and small building societies.
Although lending is clearly tailing off, no-one has shut up shop, or will admit to being even close to it.
Rachel Howarth, head of marketing at the Coventry building society, the fourth largest in the UK, says they are still very much open for new customers.
"We are doing hundreds of mortgages each week, we are still actively lending," she says.
"But things have got a lot quieter in the last few weeks.
"People are holding back because house prices are falling, especially first-time buyers."
Peter Craigie, operations director of the 34-branch Dunfermline building society echoes that view.
"We haven't shut up shop and we are certainly open for business."
Like others, the Dunfermline has become more cautious, particularly about lending on newly built properties, such as those in city centres or waterfronts.
"Our residential mortgage pipeline at the end of July was down 50% on a year ago. We are expecting a quieter second half of the year," Mr Craigie says.
A similar tale is told by Hugh May, deputy chief executive of the eight-branch Ipswich building society.
"Our lending has been very buoyant until very recently, though the indications are that the market is quietening down significantly," he says.
He acknowledges that if borrowers dwindled further then to balance the society's inflow and outflow of cash, savers rates might have to be cut.
But he says the finances of the Ipswich, and many other societies, are strong: "We are battening down the hatches but we won't be undermined. We are well regulated with excess capital, and levels of liquidity at comfortable levels.
"There are no sharks circling," he emphasises.
With no sign of the slump coming to an end, there is a distinct possibility in the coming months that lending to home buyers - as opposed to people remortgaging by just swapping lenders - may fall by 80% or even 90% by the end of the year.
Building societies still rely heavily on savers funds to finance their lending
On the face of it this should pose a problem for the UK's building societies.
Their reason to exist is to lend to house buyers.
So what would happen if that side of their business really did dry up?
That possibility seems likeliest at our smallest societies, some of which would normally lend fewer than 15 mortgages a week anyway.
The three-branch Harpenden building society handed out just four loans for house purchase in June, and processed five remortgages, considerably fewer than normal.
Paul Marsden, its chief executive, does not seem bothered at all and argues that his society could even shrink, without any problem.
"We have to balance funds from savers with our loans," he explains.
"Providing we remain in balance we are OK - there is absolutely no issue.
"We are sitting pretty, and most societies are."
At the National Counties in Epsom in Surrey, with no branches at all and just a head office, chief executive John Milton is equally relaxed.
He acknowledges there is clearly less activity than before and a relatively small proportion of what is left is new lending, as opposed to remortgaging.
"But as far as we are concerned it is not grinding to a halt - far from it," he says.
Chris Hayward , chief executive at the Penrith, saw his one branch society inundated earlier this year with would-be borrowers, when it bounced temporarily to the top of the best-buy mortgage tables.
Now he too rations customers by demanding a minimum 25% deposit.
Might applicants disappear altogether?
"It might possibly happen," he says.
"Credit worthy customers are not knocking on our door.
"It wouldn't matter at all in the short term, one to three months, but we are all concerned. We have to lend money to pay out premium savings and maintain liquidity levels."
The credit crunch has turned off the nation's mortgage tap, and in a dramatic fashion.
Sales are already down by half in the past year and approved mortgage lending is down by 70%.
In effect, the whole industry is going through a sudden and uncontrolled economic experiment.
The result? New building has ground to a halt, building workers have lost their jobs, estate agents have shut down, and house prices have fallen.
How low will it all go?
"The dramatic slump in demand is the biggest I've seen in 25 years," says Linda Will, sales director at the Stroud and Swindon building society.
"I think we are bumping along the bottom now, but I think it will be something between another 14 and 18 months before there is any recovery."
For the time being, it seems building societies think they can ride it out.