The Home Builders Federation (HBF) is calling on the Monetary Policy Committee to cut interest rates by a full percentage point this week to assist the housing market, so vital to the wider economy. It then wants to see further cuts down to 2% as soon as possible.

Critically, HBF believes that the Government must then use its influence with the banks to insist that rate cuts are passed on to homeowners if the benefits are to be felt.

HBF called for a half percent cut as long ago as May and has consistently highlighted the looming economic risks posed by the housing market downturn. The Bank has acknowledged there is no sign of rising inflation expectations, so it could safely cut Bank Rate again this week, supporting the economy, which is rapidly weakening, and the desperately struggling housing market.

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With the UK economy so heavily dependent upon a well-functioning housing market, and the housing market itself influenced by the economy, 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: "The time has now come to cut interest rates decisively - and then ensure the cuts are passed on to consumers. 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 welcomed last month's Government action to support the banking system which should bring some much needed stability and 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, declining home buyer confidence and a worsening economic outlook."

(CD/JM)