The global credit crunch is likely to last until 2010, the head of Britain's largest mortgage provider has claimed.

Andy Hornby, the chief executive of HBOS, said that he believed the global financial turmoil would continue for at least another 18 months.

Confidence on both sides of the Atlantic would only return when the American housing market starts to recover from the turmoil triggered by the collapse of the subprime mortgage market and prices begin to rise again.

Until then, Hornby said he did not believe American investors would put their money back into British banks. As about two-thirds of wholesale funding received by UK banks comes from overseas, this means there will be less money for mortgage lending. He also implied that there was little the government could do to rectify the crisis.

"My personal view, for what it's worth, is it will take 18 months to play through the system," Hornby said yesterday. "It's going to take at least that time before US house prices start to rise again, which is what's required for banks to have the confidence to start lending again."

Hornby added that there was "no doubt" that the UK would experience plummeting house prices, something that has not occurred since the 1990s.

But Hornby was not entirely pessimistic - he does not expect unemployment to reach the heights of that era.

HBOS has struggled to overcome the financial crisis which has sent house prices plummeting on both sides of the Atlantic.

In July, HBOS reported a massive 56% fall in first-half profits. The company had raised £4 billion through a rights issue earlier that month, but take-up of that heavily discounted issue was embarrassingly weak - only 8% of the bank's shareholders bought into the offer, leaving underwriters to cover the rest.

Hornby's predictions come after a week of financial gloom. Alistair Darling, the chancellor, said that financial markets "were arguably the worst they've been in 60 years"; the Organisation for Economic Co-operation and Development predicted that the British economy would fall into recession this year, a claim that sent the pound plummeting against the dollar; and the FTSE 100, London's blue-chip stock market index, lost 7% in value, which was its largest fall since July 2002.