Britain’s housing market has proved a challenging one for buyers to navigate amid high interest rates and a tight cost-of-living crisis through 2023. Even as house prices in some parts of the country have shown signs of cooling, property prices are generally much higher than pre-pandemic times.
That’s perhaps why remarks by British bank NatWest’s chair Howard Davies sparked a slew of angry responses after he said it wasn’t all that difficult to buy a house in the U.K.
“I don’t think it’s that difficult at the moment,” Davies said in a BBC interview Friday. “You have to save, and that’s the way it always used to be.”
But the up-side, according to Davies, is that the system is less risky today than it was during the global financial system. He added that some people would undoubtedly find it difficult to start the process of home-buying and they'd have to save more to do so.
“They [prospective home-buyers] 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.
His comments on the relative ease in buying houses amid a cost-of-living crisis prompted reactions from industry experts and other observers on Davies being out of touch and unaware of what the average Brits are facing.
“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,” Ben Twomey, chief of campaign group representing private renters called Generation Rent, wrote in a post on X.
Not that difficult to buy a home, says NatWest chair.
— Ben Twomey (@BenTwomeyUK) January 5, 2024
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. My baffled reaction quoted here 👇https://t.co/4gziJjpAk9
Marty Naan, a mortgage advisor, told The Guardian that Davies’s remarks were “simply a slap in the face to people struggling to make ends meet, never mind save for a deposit on a mortgage.”
“Was there ever a more out-of-touch statement about homebuying?” Naan told the outlet.
Richard Murphy, an accounting professor at the University of Sheffield, took to X, arguing the NatWest chair’s comments were a “staggering demonstration of the disconnect between bankers and reality in this country.”
Sir Howard Davies, chair of NatWest Bank, has just told Radio 4 that he does not think it is hard for people to get on the housing ladder in the UK. That is a staggering demonstration of the disconnect between bankers and reality in this country.
— Richard Murphy (@RichardJMurphy) January 5, 2024
The current average mortgage rate in the U.K. for two- and five-year fixed rate mortgages are 5.02% and 5.43%, respectively, according to property portal Rightmove.
Those rates are expected to cool slightly with potential interest rate cuts this year, and demand for housing could also rise as prices fell in the 12 months to October at the fastest pace in over a decade.
Still, mortgage rates were at 15-year highs less than six months ago, indicating that the economic pressure remains.
Halifax, the U.K.’s top mortgage lender, said in a report released last week that on average, house prices had increased for a third consecutive month in December and average properties were £4,800 pricier than the same time in 2022.
Following the backlash on his comments, Davies, who will step down from his role at NatWest in April, issued a statement on Friday.
“Given recent rate movements by lenders there are some early green shoots in mortgage pricing and while funding remains strong, my comment was meant to reflect that in this context access to mortgages is less difficult than it has been,” Davies said.
“I fully realise it did not come across in that way for listeners and as I said on the programme, I do recognise how difficult it is for people buying a home and I did not intend to underplay the serious challenges they face.”
