A lack of mortgage funding is hitting housing sales
UK housebuilder Barratt Developments has confirmed it is cutting more than a thousand jobs due to the housing slump and the squeeze on mortgage lending.
Barratt, which employs 6,700 staff, said it was cutting 1,200 jobs by closing two divisions and merging other parts of its business.
The company also said it had reached a deal with its lenders to give it extra breathing space to pay back its debt.
It added it expected housing production to hit a 50-year low in 2008.
Barratt said a £400m debt facility, which was due to be paid next April, had been extended to July 2011, news which boosted its share price.
It has also agreed a new deal with its banks to reduce the chance of breaching it debt covenants.
Chief executive Mark Clare said: "We have now substantially improve our competitive position and are better placed to deal with what will be a very challenging period ahead."
The firm has been hit by a sharp drop in the number of available mortgages for consumers and the wider housing downturn.
Barratt said total sales completions fell by 13.8% in the year to June, compared with 2007.
Completions for private homes fell 18.4% with more than a fifth of these deals were for social housing.
Average sales rates to private buyers fell 43% year-on-year in the past six months.
Cancellation rates for its homes jumped 33.6% over the past year, reflecting the "acute shortage of mortgage finance", Barratt said.
Fears have been mounting over housebuilder's balance sheets and their funding arrangements which are partly dependent on land values, which have been dented by falling property prices.
Barratt reported a writedown of £115m from its landbank - smaller than the £550m revealed last week by rival Taylor Wimpey - which has so far failed to secure a funding package with investors.
On Wednesday Bovis Homes and Redrow became the latest UK housebuilders to announce a sweeping reduction in their workforces.
Staff numbers will be cut by 40% compared with the beginning of the year at both firms.
Persimmon and Taylor are also cutting thousands of jobs.