The housing downturn is likely to trigger a wave of mergers among building societies, as bad debts from mortgages rise and profits from lending fall, according to a senior analyst at KPMG.

The KPMG Building Societies Database 2008, due out this week, says that while the 59 remaining societies have “weathered the storm comparatively well so far ... the second longer and slower-paced round of the credit crunch is now under way ... [and] this poses more problems for societies”.