The Home Builders Federation (HBF) has welcomed the announcement by the government to extend the credit guarantee scheme, something it has been demanding for a number of months.

The HBF said the key to the success of the measures will be the bank's reaction and the extent to which they take up the facility.

HBF also welcomed the commitment by the government with regard to changes in Northern Rock's lending policy, and hoped that the influence the government now has with the other major mortgage lenders will result in similar commitments.

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John Stewart, Director of Economic Affairs at the HBF, said: "This is a positive move by government to address the key issue affecting the housing market, namely the lack of mortgage finance. The government must now work with lenders to ensure banks use the facility to assist beleaguered home buyers.

"Restoring sensible levels of mortgage lending is absolutely critical to any recovery, and if combined with further measures to assist first-time buyers, and steps to get new home building sites started, should make a real difference to the housing market and thus the wider economy."

(CD/JM)