Howard Davies, chairman of Natwest Group Plc.
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“I don’t think it’s that difficult at the moment,” Davies said when asked when it might be easier for Brits to buy a property.
“You have to save money, and it always used to be that way,” he added.
UK mortgage rates have been largely stable at above 5% since April 2023, with some lenders cutting rates just this week in anticipation of rate cuts from the Bank of England. Higher tariffs, in turn, have limited available inventory on the market.
Meanwhile, higher inflation and a cost-of-living crisis have made it more difficult for would-be homebuyers to save the 10% minimum down payment typically required to purchase a home.
Davies acknowledged that consumers today need to save more for their down payment, partly due to new protections introduced in the wake of the financial crisis. However, he argued that the landscape is now safer for consumers too.
“There are dangers in having very, very easy access to mortgage credit,” he said.
“I am fully aware that there are people who find it very difficult to start the process. You will have to save more. But that, I think, is due to the change in the financial system as a result of the mistakes made in the last global financial crisis, and we have to accept that we are still living with that,” said Davies.
Still, the comments caused a stir on social media, with critics describing Davies as out of touch.
Ben Twomey, chief executive of campaign group Generation Rent, said in a post that Davies had little idea of what it was like for tenants wanting to take the first step on the property ladder.
“What planet does he live on?” I wonder how often Sir Howard speaks to tenants as we pass on a third of our wages to landlords and struggle to pay our mounting bills,” Twomey said.
Richard Murphy, political economist and professor at the British University of Sheffield, described The comments called it “a shocking demonstration of the disconnect between bankers and reality in this country.”
The average property in Britain currently costs £287,105 ($366,357), according to figures released on Friday by Halifax, the UK's largest mortgage lender. However, costs are even higher in major cities, where the average house in London now costs £528,798.
Richard Donnell, chief executive of Zoopla, told CNBC on Friday that there would likely be a surge in property purchases in 2024 due to the interest rate cut. However, he noted that the outlook remains “challenging” due to subdued sales volumes in 2023.
“Last year only a million people moved home,” Donnell said.
“Hopefully we’ll just build up sales volumes again.” [in 2024]because going from 2% mortgage rates to 4%, 5%, 6% mortgage rates was never going to be a one-year, one-time thing,” he added.