Barratt Developments today made writedowns of £85 million on its development sites and warned more are likely as it secured its financing for the next three years, ending fears it might break its borrowing rules.

The group, which cut 1000 jobs last week as the housebuilding industry slumps, today said shareholders will also bear the pain as it scrapped its final dividend. But relief that it has secured its financing saw its shares, which had fallen by 90% this year, bounce 103/4p to 643/4p.

Chief executive Mark Clare said the industry was braced for the lowest level of housebuilding for 50 years.

"There is going to be no upturn until the mortgage lending tap is turned back on," he said. "That means there is no visibility as to when the market will recover, and that means we are under pressure to bring volumes down in the coming year, seek cost reductions and conserve cash."

Barratt completed 18,588 homes in the year that ended last month, up 8% up on the previous year. But Clare said the downturn only really began in April. For the group's second half, or the first six months of 2008, sales of private houses fell by 43% and the value of forward sales of homes at the year end halved from £1.4 billion to £700 million.

"Visitor numbers remained fairly robust," said Clare. "In the second half, they were only down by 15%. That really emphasises how much the downturn has been driven by the lack of available mortgages, although latterly there have also been more signs of waning confidence among consumers."

Barratt has analysed its entire building programme and is writing down values site by site on the basis that house prices will fall by 10% this calendar year. The immediate hit is of £85 million on the year just ended. But the group said it could see up to another £50 million of writedowns if it decides to sell off entire sites rather than develop them to completion over the next three or four years.

Clare said while that meant taking a hit, it could also produce significant amounts of cash.

There is also likely to be a £30 million writedown on the commercial property arm of last year's takeover of Wilson Bowden. This was never a core business, and Barratt is selling down the £200 million portfolio.

Its bankers have agreed new terms on £400 million of its borrowings - the ones that were most at risk of breaching covenants next year.

Clare said he would not reveal the new terms of the loans but admitted that the interest rate is higher, and an arrangement fee had to be paid.

"We will not say what the terms are yet, not least because a couple of our rivals are also going through the same process," he said. "But let's say they are at the current going rate."

The final dividend, which was 24.3p last year, is being scrapped. The group said it will review the coming year's dividend.

• Anglo-Irish housebuilder Abbey is also scrapping its final dividend after profits slumped to e16.8 million (£13.4 million) from e45.3 million following a e20.6 million writedown.