‘Government action welcome, but big cut now necessary to boost housing market and wider economy – economic risks far outweigh inflation concerns’ The HBF is calling on the Monetary Policy Committee to cut interest rates by a full percentage point tomorrow to assist the housing market, so vital to the wider economy. HBF called for a half percent cut as long ago as May and has consistently highlighted the looming economic risks posed by the housing downturn. The Bank has acknowledged there is no sign of rising inflation expectations, so it could safely cut Bank Rate in October, supporting the desperately struggling housing market. HBF welcomes the Government measures announced today to bring stability to the financial system. However the acid test will be whether UK banks and building societies act on the Chancellor’s wish that they begin restoring lending to home buyers to more normal levels. At present, the mortgage famine is driving down housing transactions and weakening house prices. With the UK economy so heavily dependent upon a well-functioning housing market, a boost at this time would have clear positive benefits. Also, future housing provision, so vital to the UK’s long-term growth and development is at risk if urgent steps are not taken to assist the home building industry. Stewart Baseley, Executive Chairman of HBF said today: “The time has now surely come to cut interest rates decisively. The worsening state of the economy means that any lingering concerns about inflation are far outweighed by the need to boost the housing market, so critical to the health of the wider economy. We welcome today’s Government announcement that should bring some much needed stability to the banking sector and will hopefully increase mortgage liquidity. But action from the Bank is also needed if we are to break the vicious downward spiral of sharply lower mortgage lending, falling housing transactions, falling prices and declining home buyer confidence.” - Ends – Notes to Editors: 1. The Home Builders Federation (HBF) is the principal representative body for private sector home builders and voice of the home building industry in England and Wales. The HBF’s 300 member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk For media enquiries, or to arrange an interview, please contact Steve Turner 020 7960 1606 07919 307 760 steve.turner@hbf.co.uk
