The boss of housebuilder Crest Nicholson has predicted the recent mortgage rate volatility will calm and may have reached its peak, but he warned customer demand and confidence could cool if interest rates continue to rise.
Peter Truscott’s comments came as the FTSE 250 company published first half results that pointed to good underlying demand and a bullish stance on land buying, but that also showed sales tumbled by more than a fifth as challenging market conditions hit.
Most recently the industry has seen in recent weeks lenders increase prices of mortgage offers as they look at the prospect of interest rate rises from the Bank of England.
Truscott told the Evening Standard: “We see banks as now being up to date having anticipated the next move in the base rate.”
He added that amid economic uncertainty and until there is more stability there will be “some buyers that want to wait on the sidelines but pricing will broadly hold up”.
In Crest Nicholson’s results statement Truscott also said the high cost of borrowing and the end of the Help to Buy scheme is making it tough for first time buyers.
He said: “If interest rates continue to rise, and remain elevated for a sustained period of time, this will undoubtedly exacerbate this issue even further and start to impact demand and confidence again.”
Crest Nicholson was among housebuilders hit in the aftermath of September’s mini Budget which sent mortgage bills jumping.
In the six months to April 30 revenue fell 22% to £282.7 million and the number of home sales dropped to 894 from 1,096.
The company, which has recently bought land in popular commuter areas such as Windsor and Oxford, said the market started to recover during Spring.
Pre-tax profit was £28.4 million, compared with a £52.5 million loss a year earlier when there were some one-off costs.
