Homeowners will have to wait at least two years for the cost of mortgages to come back down, the chairman of the Building Societies Association gave warning today.

Speaking at the BSA conference in Manchester, Iain Cornish indicated that the recent damage to markets caused by the credit crunch was irreversible and would change the way people finance property purchases in the UK forever.

"There is clearly no going back... In my view, it is hard to see global and domestic markets recovering in anything less than a two-year timescale, and when they do, how they operate will be very different to how they were in the first part of the decade," he said.

Since the credit squeeze began, lenders have been desperately trying to escape the best-buy tables to avoid attracting business that they would struggle to fund. They have also been increasing rates and tightening up lending criteria to repel higher risk customers and those who do not have big deposits.

Mr Cornish said that recent turmoil in the mortgage market, which has forced many societies to shut up shop temporarily in order to manage demand, proved that "no one is immune from the effects of the liquidity crisis and the credit crunch".

Mutuals had benefited from a surge in deposits after the run on Northern Rock from savers looking for a safer home for their cash. Building Societies typically have much lower exposure to the wholesale markets that have dried-up over recent months and made it more difficult for banks to fund mortgage deals. However several of the smallest societies, including Bath and Earl Shilton, were recently forced to withdraw mortgage deals as they struggled to cope with an increase in applications from customers searching for the cheapest rates.

Mr Cornish said that while it would take some time, the mortgage market would return to a "more sensible" state in the long-term.

The chairman's comments came after Hector Sants, the chief executive of the Financial Services Authority, launched a stinging attack on the building societies sector.

Mr Sants said that some building societies were guilty of "stagnation" and poor business practices including: "excessive concentration in the buy to let market; continued acquisition of mortgage books, even when routine funding was becoming problematic; and poor understanding of the extra risk of major exposures to commercial borrowers."