Taylor Wimpey has seen soaring mortgage rates “inevitably” impact the first half, with the housebuilder recording a slide in profits and revenue tumbling by 21%.
Chief executive Jennie Daly said there were “variable” market conditions during the six months to July 2, with an encouraging start. That was before a weaker second quarter when the Bank of England responded to higher than expected inflation by raising interest rates by a half point to 5%.
The FTSE 100 company has seen 27% of its first time buyers try and adapt by taking out longer mortgages- over 36 years. The figure was 7% in 2021.
It added that for second time purchasers, those taking out mortgages for over 30 years has jumped to 42% from 28% in 2021.
Taylor Wimpey said it had a robust sales rate when taking into consideration the challenging market.
Revenue was £1.6 billion, down from £2.07 billion, and sale completions fell 26% to 5,120 although that was ahead of City expectations. Pre-tax profits dropped to £237.7 million from £334.5 million.
Current trading shows conditions are still tough with the current value of the forward order book standing at £2.2 billion compared with £2.9 billion a year earlier. Reservation are below levels seen in recent years.
But Taylor Wimpey said there is “strong underlying” interest for its properties. It expects full-year completions, excluding from joint ventures, to be in the range of 10,000 to 10,500, the upper end of its previous guidance.
Daly told the Evening Standard that in London, where it is on sites including in Greenwich, Leyton and Whetstone, there “is still a high level of interest in buying”. She added: “We are seeing the ability for customers to achieve an affordable mortgage is tough, but we are still performing well [in the capital].”
In the company update Daly said: “Taylor Wimpey is a strong, sustainable and agile business underpinned by a robust balance sheet and an excellent landbank. We remain well positioned to manage the business through near term challenges while maximising value in the medium to long term.”
