The chair of one of Britain’s biggest banks faced a backlash Friday after saying it is not “that difficult” to get on the property ladder.
NatWest chair Howard Davies told the BBC’s “Today” program that the current economic landscape — which has seen interest rates rise to a 15-year high — is little different to other historical periods.
“I don’t think it’s that difficult at the moment,” Davies said when asked when it might be easier for Britons to purchase a property.
“You have to save, and that’s the way it always used to be,” he added.
U.K mortgage rates have largely held steady at over 5% since April 2023, with some lenders only this week lowering rates in anticipation of interest rate cuts from the Bank of England. Higher rates, in turn, have limited available stock on the market.
Meantime, higher inflation and a cost-of-living crisis has made it harder for would-be homebuyers to save the minimum 10% deposit typically required to purchase a home.
Davies acknowledged that consumers today would need to save more for their down payment due in part to new protections brought in in the wake of the financial crisis. However, he argued that the landscape was now safer for consumers, too.
“There were dangers in very, very easy access to mortgage credit,” he said.
“I totally recognize that there are people who are finding it very difficult to start the process. They will have to save more. But that is, I think, inherent in the change in the financial system as a result of the mistakes that were made in the last global financial crisis, and we have to accept we’re still living with that,” Davies said.
Still, the comments sparked a furore 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 what it was like for renters hoping to gain their first step on the property ladder.
“What planet does he live on? I wonder how often Sir Howard speaks to renters, as we pass on a third of our wages to landlords and struggle to pay our soaring bills,” Twomey said.
Richard Murphy, a political economist and professor at the U.K.’s University of Sheffield, described the comments as “a staggering demonstration of the disconnect between bankers and reality in this country.”
The average U.K. property currently costs £287,105 ($366,357), according to figures released Friday by Halifax, the U.K.’s biggest mortgage lender. Costs in major cities, however, are even higher, with the average London home now priced at £528,798.
Richard Donnell, executive director of Zoopla, told CNBC Friday that there was likely to be an increase in property purchases in 2024 as a result of easing interest rates. But he noted that the outlook remained “challenging” on the back of supressed sales volumes in 2023.
“We only had a million people move home last year,” Donnell said.
“Hopefully we just build back sales volumes [in 2024], because adjusting from 2% mortgage rates to 4, 5, 6% mortgage rates was never going to be a one-year, once and done thing,” he added.