The securitisation markets, for many years the biggest source of funding for mortgages and consumer lending, may not return to “normal” until at least 2011, a survey of hundreds of industry participants shows.

The gloomy expectations from industry insiders – who might be expected to be more optimistic than outsiders because they believe in the market’s importance to the economy – further highlights the importance of US government and Federal Reserve actions to find ways to plug this financing gap.

For years, the sale round the world of thousands billions of dollars of securities backed by mortgages, auto loans, credit cards and student loans fuelled the boom in credit. In 2007, securitisations accounted for half of the $5,655bn of money raised in the US credit markets, according to the American Securitisation Forum.

This source of funding has dried up, as the plunge in house prices and the economic downturn has triggered losses on thousands of billions of dollars of securities, many of which had been considered safe investments.

This has shattered confidence and left banks and investors hit by losses.

Addressing these “toxic assets” is seen as essential to restoring confidence and is expected to be a vital part of Treasury Secretary Tim Geithner’s financial rescue plans this week. “Unless traditional investors return to the asset-backed market, it will be difficult to wean the market off the low-cost financing provided by the government,” said Joseph Astorina, a securitisation analyst at Barclays Capital.

The pessimistic outlook from securitisation industry participants, thousands of whom are in Las Vegas for a get-together, marks a dramatic shift from last year.

A year ago, the industry thought the credit crisis would largely to over by the end of last year. Now, 43 per cent of 450 respondents did not expect a return to normal until 2011; 25 per cent expect market problems to last until 2012 or beyond. Nearly 7 per cent never expect a return to normal.

On Friday, the Fed revealed financing terms for a $200bn lending facility that will see the central bank taking on the role traditionally played by banks, that of providing debt to hedge funds and other investors.

Through the term asset-backed securities loan facility the Fed is offering cheap financing so hedge funds can buy securities backed by auto loans and credit card loans. If it works, it could be extended to finance the buying of securities backed by mortgages and other assets.

The survey higlighted four issues seen as most important to fixing the markets: addressing the overhang of distressed assets; changing investor sentiment; restoring confidence in rating agencies and improving transparency and disclosure practices.