In a submission to the Chancellor, the FMB has called on George Osborne to look at the issue, which has consistently been cited by SMEs as their primary barrier to building more new homes.
Estimates by FMB members suggest that, output from SME house builders would increase by as much as 100 per cent if the loan to project value ratios on offer were improved to 80 per cent from a standard 60 per cent.
Based on recent housing statistics, this could equate to almost 20,000 new homes being built, making a significant impact on the supply side gap in the UK housing market.
FMB chief executive Brian Berry said: “Conservative ministers have been incredibly successful in improving access to mortgage finance and reviving demand in the housing market, but access to finance for those in the business of supplying new homes has remained extremely difficult.
“There remains a reluctance by many banks to lend to SME house builders to help finance small housing developments.”