HBF says Bank of England must cut interest rates by 0.5% in response to 'rapidly deteriorating conditions' in housing market

The Home Builders Federation has called on the Bank of England to cut the base rate of interest by half a percentage point tomorrow.

The HBF said the Bank cannot treat the current housing downturn like any previous crisis.

It said: “A half percent cut in interest rate is now imperative or rapidly deteriorating conditions in the housing market risk causing a serious economic slowdown, a situation unique in living memory that needs a fresh approach.”

John Stewart, director, economic affairs at HBF added: “Previous economic crises have led to housing market slumps, but this time the cart is leading the horse, with the speed and depth of the downturn threatening a serious wider economic crisis.

“We just cannot rely on lessons learnt and solutions based on past downturns as this is a completely new situation in which we find ourselves.”

This week it emerged reservation levels are still two-thirds below the level of last year after a dramatic fall in April due to the lack of mortgage availability.

According to confidential HBF figures, the average reservation rate per site per week across its members in May was about 0.3 compared to between 0.8 and 1 this time in 2007.