If the credit crunch and the withdrawal of thousands of fixed-rate loans started the housing market slump this spring, then wider worries about the economic climate have helped the downturn to gather pace in the last fortnight. Two builders this morning surprised no-one with their very gloomy trading updates. Bovis Homes and Redrow, like their colleagues at Barratt Developments, Taylor Wimpey and Persimmon, are cutting jobs in an attempt to ride out the storm which has seen housing sales fall by 55 per cent.

Both chief executives claim that the current downturn is starting to look an awful lot worse than the 1990s downturn, which did indeed trigger a recession. To quote Redrow's chief executive, buying a house is one of the biggest decisions you will ever make. It's not one you can take easily if you are worried about whether you will have a job next month, or if your finances are so tightly balanced that an increase in interest rates throws your family budget out.

What hope is there to be taken from these statements? Unfortunately, not a lot. In Redrow's case, there are likely to be writedowns to come and the current renegotiations of the company's lending facilities will not be easy. By September, those talks are expected to be complete but cancellation of the dividend is the likely price the directors will pay for more lenient lending terms.

As for Bovis, it is also stopping work on sites, slashing costs and not buying land. Consequently, its margins will fall and, with the company taking a view that this downturn will last for at least 18 months, there is no short-term hope of recovery. Neither company's shares are worth risking, even at this low point.

The grim news from the housebuilders will certainly focus the Bank of England's Monetary Policy Committee (MPC). Housebuilders, predictably, think the current woes of the housing market far outweigh other inflationary factors being seen in the wider economy - notably in food and fuel prices. That self-interested plea is unlikely to exert undue influence on the MPC's decision on Thursday. It would probably take several cuts in rates to reverse the catalogue of doom heard from housebuilders in the last two weeks, anyway. And that is certainly not on the cards.

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