The Building Societies Association chief executive Robin Fieth has written to Osborne outlining the need for an ‘urgent’ plan for the housing market.

It called on the Chancellor to sell pensioner bonds to raise money to invest in affordable housing projects, it said this would benefit both young buyers and older savers.

Osborne’s new pensioner bonds offer preferential rates to over 65s but have been accused of draining funds away from the mortgage market.

Withdrawals of savings worth £8.2bn were made from banks and building societies in January with £6.6bn of that cash flowing into the NS&I savings scheme.

It has also asked for further support for niche areas of the housing market such as self-build properties. Smaller building firms, co-operative housing groups and shared ownership schemes must also become mainstream propositions.

Fieth said: “Using the money raised from the Pensioner Bonds to make affordable housing available to young people seems a neat way for a scheme that benefits those 65 and over, to also help younger people who face such a chronic shortage of affordable housing.”