Galliford Try, Barratt and Redrow have all called on ministers to come up with plans to prop up the housing market or risk further economic misery.
Mortgage approvals are down 71 per cent compared with last year and the rescue of the US mortgage agencies Fannie Mae and Freddie Mac – which guarantee around half of the US $12 trillion housing market – has intensified pressure for similar state-backed guarantees in the UK.
House builders want the Government to offer guarantees to underwrite all mortgage lending, just as it did with Northern Rock’s mortgage book when the lender ran into trouble.
Galliford Try financial director Frank Nelson said: “There are people out there who want to buy houses.
“The Government could provide a guarantee to banks for a sum of money to provide the liquidity for new mortgages.
“I am not suggesting the Government goes as far as the likes of Freddie Mac and Fannie Mae, but they could help more.”
Mr Nelson added that the Government should reintroduce plans to allow buyers to purchase buy-to-let properties through Self Invested Personal Pension Plans.
He said: “The rental market is increasingly difficult and first-time buyers cannot buy because they cannot get a 25 per cent deposit.
“Removing restraints on SIPPS would encourage people to go out and buy a rental property with their pension.”
Barratt chief executive Mark Clare also believes the Government must increase liquidity in the mortgage market. He said: “Banks are big and ugly enough to look after themselves, but if the Government has any mechanisms to help them provide more liquidity to the market then they must be used.
“What needs to happen is to help the banks improve their confidence of lending.”
Meanwhile Redrow chairman Alan Bowkett said freeing up the mortgage market should also be a key priority for the Government at this time.
But Bank of England Governor Mervyn King has warned Britain’s stricken mortgage lenders they cannot rely on the central bank to support them through the credit crisis.
He said central banks should not be regarded as a “magical piggy bank” for mortgage lenders, and that guaranteeing the mortgage market would have profound economic and fiscal consequences for decades.
FIVE-POINT PLAN FOR HOUSING
The Federation of Master Builders has revealed its own five-point plan for kick-starting the building industry:
• Introduce coherent strategy to make existing housing stock more energy-efficient and greener
• Reduce VAT from 17.5 per cent to five per cent on repairs and maintenance work
• Simplify the planning system to make it quicker and simpler
• Abandon the proposed Community Infrastructure Levy on developers
• Reform stamp duty to make it a graduated tax