NatWest’s chair has bewildered the internet after saying he thinks it is not “that difficult” to get on the property ladder in the UK.
As the cost of living crisis continues and interest rates remain high, Sir Howard Davies suggested it just came to down to... saving.
On Radio 4′s Today programme on Friday, presenter Amol Rajan asked: “When do you think it’s going to be easier for people to get on the property ladder in this country?”
There was a pause, before Davies said: “I don’t it’s that difficult at the moment.”
Rajan responded with surprise, and asked: “To buy a house? In this country?
“Are we in the same country or are you reporting from overseas?”
Interest rates are still high at 5.25% – the highest we’ve seen in the UK since March 2008.
Davies just said: “You have to save and that’s the way it always used to be.”
Rajan hit back: “The multiple of average earnings you require to get the house, I mean I’m just thinking of our listeners under 40, have you tried buying a house in a major city in this country?”
Howard replied: “Yes, undoubtedly, but what we saw, in the financial crisis was the risk of having people being able to borrow 100% in order to get on the property ladder, and then suffering severe falls in terms of the equity value of their houses, and having to leave and have a bad credit record.
“So there were dangers in having very, very easy access to mortgage credit.”
He also said some people will find it “very difficult to start the process,” but added “they will have to save more” because of the ongoing repercussions of the 2008 financial crash.
The latest date from the UK’s largest mortgage lender, Halifax, has found the average price of a UK property is currently £287,105.
Usually, a deposit worth at least 10% of the propety’s value is required to secure a mortgage from a lender.
But, properties have been getting more expensive, and average salaries haven’t caught up – which is why the average age of a first-time buyer is over 33.
Saving has been particularly trying recently due to the cost of living crisis, driven by inflation (at a 40-year-high in 2022) which made everyday essentials more expensive – and eroded the value of savings.
Renting, too, is taking a larger portion of people’s pay now, as landlords pass the high interest rates onto tenants.
It’s understandable, then, that people on X (formerly Twitter) didn’t quite agree with Davies’ summary of the situation.