President Bush sought to restore calm to America’s troubled housing market today by announcing measures intended to help thousands of borrowers unable to meet mortgage payments.

The proposals are his most explicit acknowledgment yet that a spiralling credit crisis poses a serious threat to the US housing market and to the wider economy.

With a rising number of Americans defaulting on their mortgages, especially the less creditworthy “sub-prime” borrowers, Mr Bush conceded there had been “some excesses” in the industry but said the US economy was strong enough to pull through.

Mr Bush’s appearance in the White House Rose Garden was as much a political one as an economic effort to try to halt the slump in the US housing market. In reality, the actions of the US Federal Reserve will have far more impact on the US economy than anything Mr Bush can achieve, and his list of proposals today was modest. But it also made clear that Mr Bush is attentive to the problem.

Mr Bush understands first hand the damage a potential recession can do a party’s political fortunes. His father lost his 1992 re-election bid to Bill Clinton in large part because of the US economy, which entered a recession during his presidency. The current downturn in the US housing market – a report this week revealed the sharpest drop in house prices for over 30 years – has some analysts fearful of a looming recession.

Mr Bush said: “The recent disturbances in the subprime mortgage industry are modest, they’re modest in relation to the size of our economy. This process has been unfolding for some time and it’s going to take more time to fully play out. As it does, America’s overall economy will remain strong enough to weather any turbulence.”

Democrats have accused the Bush Administration of being insensitive toward the plight of a rising tide of poorer Americans who have given high-risk mortgages, often by less reputable lending houses, who now face rapidly rising monthly payments. Barack Obama, a Democratic presidential candidate, said today: “These are welcome steps, but the president’s proposal does not go far enough.”

Mr Bush called on Congress to change the law to allow the Federal Housing Association to guarantee loans for borrowers who are at least 90 days behind on their mortgage payments. “This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes,” he said.

He called for a temporary tax code alteration to help struggling mortgage holders avoid unexpected taxes. “When you home is losing value and your family is under financial stress, the last thing you need to do is to be hit with higher taxes. So I believe we need to change the code.” But Mr Bush said it was not the federal government’s job to bail out lenders, many of whom have gone bankrupt.

“The Government’s got a role to play. But it is limited. A federal bailout of lenders would only encourage a recurrence of the problem. It’s not the Government’s job to bail out speculators or those who made the decision to buy a home they knew they could never afford. Yet there are many American homeowners who can get through this difficult time with a little flexibility from their lenders or little help from their government.”

Financial analysts said Mr Bush’s proposals - which came as Ben Bernanke, the Federal Reserve Chairman, also spoke on the same subject - were unlikely to have an immediate impact on the housing market, or for those in danger of losing their homes. “I don’t think he’s outlining a rescue plan. This is more messaging. It’s more pomp,” said Richard Steinberg, an asset management executive in Florida, one of the hardest hit states.

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