HBF fears 'unprecendented' slowdown to trigger economic crisis

The Home Builders Federation (HBF) has warned the industry the “unprecedented” housing slowdown could trigger a dismal economic crisis.

The housing body has urged the Bank of England to cut interest rates by half a percent to avoid an economic slowdown “deeper than (it) anticipates”.

HBF economic affairs director John Stewart said the speed of the housing slowdown had shocked experienced members of the industry.

He said: “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.”

The HBF said quarterly mortgage approvals had fallen by 43% since their peak in 2006.

But in the 1988 to 1992 housing slump, approvals had fallen by only 32% at the same stage.

The HBF said indicators remained negative, and the industry was seeing escalating job losses “with no end in sight.”

It claims a cut to interest rates would increase funds available for lending and help alleviate the mortgage crisis.