Halifax and Bank of Scotland owner HBOS came up with its most gloomy view of the UK housing market today, as it formally launched its £4 billion cash call on shareholders.

The country's biggest mortgage lender said it now expects the number of houses sold across the country this year to almost halve with prices falling by "up to 9%".

But from the City's point of view the bank, led by chief executive Andy Hornby, updated trading without revealing massive new writedowns in its holdings of subprime-related assets and loans. Today it added April and May's trading to the previous firstquarter update with a mere £9 million of writedowns added to the £2.84 billion announced in April.

Overall, Hornby said trading was satisfactory and the bank should " demonstrate a resilient performance in 2008".

The news should reassure HBOS shareholders that they should take up their rights. They are being offered two new shares for every five they already hold at 275p each.

That issue came under huge risk last week when short-selling hedge funds drove the HBOS price down to 258p, leaving the threat that the entire issue would be left with underwriters Morgan Stanley and Dresdner.

But last Friday the Financial Services-Authority rushed out strict limits on short-selling and HBOS shares recovered sharply. Today they were trading down 131/4p at 3051/2p.

Hornby admitted Halifax was seeing an increase in mortgage borrowers failing to keep up with their payments. The bank has also increased its presence in the buy-to-let market. He also said it was managing to force through new mortgages at higher rates as a result of the fall in the housing market.

Hornby said around a third of the mortgage portfolio is due to be "repriced" this year as customers come off fixed or introductory rates.

On the other side of the book Halifax has attracted far more savings this year than last as it improved rates and inflows were at a record level in May.