Alistair darling yesterday urged mortgage lenders to cut the cost of home loans, as policy makers voice concerns about the housing market. The housing market has slowed over the past few months after years of double-digit growth and lenders, hit by the credit crunch have curbed new lending.

In a joint statement by lenders, they agreed that the Bank of England’s plan to allow banks to swap hard-to-shift mortgage assets for government debt would ease economic pressures and allow them to offer cheaper loans.

The Bank of England has cut interest rates three times since December to shore up the economic market, but most lenders have not passed these cuts to their customers. The government has said that it wants lenders to do more for people who are having repayment difficulties.