LONDON (AP) — UK homebuilders Bovis Homes Group PLC and Redrow PLC each said yesterday they were slashing staff by 40 percent — more signs of the distress in Britain's dismal and deteriorating housing market.

Bovis reported that sales in the first half of the year were down 32 percent, and said it was cutting its dividend by 75 percent, while Redrow reported a 19 percent drop in sales and said it was rethinking its dividend policy. The planned lay-offs amount to 540 employees at Redrow and 400 at Bovis.

One homebuilder after another has reported a sales slump as falling house prices, sagging consumer confidence and a restrictive mortgage market have bitten into demand.

Persimmon PLC, the second-biggest UK home builder, said on Tuesday that its first-half sales were down 31 percent, and that it was cutting its staff by about a fifth. Earlier this month, Taylor Wimpey, the nation's biggest home builder, said its sales were down by a third. Redrow gained 3.9 percent to close at 100 pence ($1.97), Bovis rose 1.7 percent to 323 pence ($6.36), Taylor Wimpey rose 16.4 percent to 30.25 pence (60 cents) and Persimmon gained 5.1 percent to 247.75 pence ($4.88) on the London Stock Exchange.

The Bank of England meanwhile reported that average interest rates on a two-year fixed-rate loan for 75 percent of the purchase price rose to 6.63 percent in June, the highest since February 2000.

"Overall, the picture across the housebuilding sector is bleak," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers. "Banking convenants are now coming dangerously close to being breached and managements across the board are switching their focus from profits to cash flow — heightening investor concerns that the fight has now become one of survival," Bowman said.

Mortgage lender Nationwide reported yesterday that 65 percent of the respondents to its latest consumer confidence survey thought it was a bad time to make a major purchase, such as a home or a car. Fifty-two percent thought the economic situation was bad, up 13 points from a month earlier.

The survey was based on responses from 1,000 people between April 21 and May 18, and had a margin of error of plus or minus three percentage points.

"We have experienced an unprecedented decline in the fortunes of the UK housing market in a very short period of time," Redrow said in a trading update. It added that "the difficult markets we are confronting may persist for some time".

The company said the market for both new and existing homes has declined rapidly. Reservations for its homes were down 55 percent in the first half.