Sir Howard Davies, chairman of NatWest has said it is not “that difficult” to get onto the property ladder.
He told prospective buyers they have to save which is “the way it always used to be,” but yet the UK is in a cost of living crisis.
This has been branded as a “PR disaster for NatWest” and Sir Howard has been slammed for being “totally out of touch with reality” and he should come “out of his ivory tower and spend time in reality.”
According to the Halifax house price index property values has increased by 1.7% on average in 2023 and the average home is now valued at £4,800 higher than what it was at the end of 2022.
Newspage asked brokers and property experts if they agreed with his statement, he was slammed by experts.
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Marty Naan, Mortgage & Protection Adviser at Marty Naan Mortgage Advice, said, “Was there ever a more out-of-touch statement about home buying? Telling first-time buyers it’s not that difficult to get on the ladder is quite simply a slap in the face to people struggling to make ends meet, never mind save for a deposit on a mortgage.
“Sir Howard Davies seems to have forgotten what it is like to be young. In my local area, a standard 3-bed semi might cost in excess of £500,000.
“A reasonable deposit therefore is £25,000 and a mortgage of £475,000 would require income of at least £106,000.
“The discussion of ‘average’ house prices and ‘average’ interest rates is moot as homes, mortgages, deposits and interest rates are specific, not average. The UK mortgage market needs inspiring leaders, not out-of-touch dinosaurs who throw out blanket statements like this.”
Elliott Culley, Director at Switch Mortgage Finance said, “A PR disaster for NatWest. It’s not surprising to hear out-of-touch comments, about how difficult getting on the ladder is.
“On average, the cost of a typical UK house was found to be 6.7 times average earnings. Yes, people need to save but the amount is now far greater than it has ever been.”
Rohit Kohli, Director at The Mortgage Stop said, “This is another case of an out-of-touch overpaid banker not recognising the actual economic situation that millions of people in this country are facing every day.
“It’s not just what has happened over the last couple of years but has been a systemic problem for over a decade with house prices booming whilst wages stay flat. It’s just another example of elitist thinking blaming your average Joe.
“I’d suggest Sir Howard Davies come out of his ivory tower and spend some time in reality instead.”
Justin Moy, Managing Director at EHF Mortgages added, “Getting onto the property ladder has been an increasingly difficult challenge over the last decade, with average property prices around 7-8 times average incomes, compared to when the NatWest chairman perhaps bought his first property.
“With a variety of purchase schemes withdrawn or tempered down over the years, the opportunity to buy is difficult and with higher rents it’s not easy to budget for normal bills, let alone save for a deposit.
“Reliance on gifted deposits continues to be at its highest, rates are high for those with smaller deposits, and the cost of living is a huge challenge for borrowers old and new. Howard Davies needs to sit on the mortgage desk in one of his branches to get a real understanding of first-time buyers and their challenges.”
Sir Howard was asked by BBC Radio 4’s Today programme when will it be easier for prospective house buyers in the UK to get on the property ladder, he said, “I don’t think it is that difficult at the moment.”
He added: “You have to save and that is the way it always used to be.”
Sir Howard continued, “What we saw in the financial crisis was the risk of having people being able to borrow 100% in order to get onto the property ladder, and then suffering severe falls in the equity value of their houses, and having to leave and having a bad credit record. So, there were dangers in very easy access to mortgage credit.
“I totally recognise 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.”