A bank chief backtracked after sparking disbelief from many young Londoners on Friday by saying it is not “that difficult” to get on the housing ladder.
Sir Howard Davies, chairman of the major retail bank, said prospective buyers have to save, and that “is the way it always used to be”.
Average house prices in London were £667,019 in December, according to Rightmove.
Asked by BBC Radio 4’s Today programme when it will be easier for people in the UK to get on the property ladder, Sir Howard said on Friday: “I don’t think it is that difficult at the moment.”
Pressed about this claim, he added: “You have to save and that is the way it always used to be.”
NatWest Group Chairman Sir Howard Davies tells the Today Programme:
— Tom Harwood (@tomhfh) January 5, 2024
“I don’t think it’s that difficult to buy a house.”
Laughable really. Living on another planet. Utterly blind to this country’s severe housing shortage. pic.twitter.com/RlbigoU90S
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.”
Reacting to his remarks, Lib Dem Treasury spokesperson Sarah Olney MP said: "This is laughable. What planet is he living on?"Banks and Government Ministers are completely out of touch on this. Young families across London and commuter belt will be spitting out their tea in disgust reading these comments."
Property experts also piled on the criticism.
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.”
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, claimed: “Sir Howard Davies is totally out of touch with reality.”
Stephen Perkins, Managing Director at Yellow Brick Mortgages, stressed: “Without help from the Bank of Mum and Dad or inheritance, it is incredibly hard to save the £30k or so deposit often needed to be able to buy an average-priced house, especially if privately renting.”
Lewis Shaw, Owner at Shaw Financial Services, added: “Perhaps Sir Howard would like to come and spend a week in the real world where tenants are pushed to breaking point by soaring rents and unable to save for a deposit.”
NatWest Group Chairman Sir Howard Davies tells the Today Programme:
— Tom Harwood (@tomhfh) January 5, 2024
“I don’t think it’s that difficult to buy a house.”
Laughable really. Living on another planet. Utterly blind to this country’s severe housing shortage. pic.twitter.com/RlbigoU90S
Sir Howard issued a statement later saying: “Given recent rate movements by lenders there are some early green shoots in mortgage pricing andwhile funding remains strong, my comment was meant to reflect that in thiscontext access to mortgages is less difficult than it has been.
"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.
"People have to save much more than they did in the past and that is very tough for first time buyers. The role for banks in today’s environment is to lend responsibly and support customers to build a savings habit and move towards home ownership.”
He also faced questions about the fallout of the debanking saga, in which former Ukip leader Nigel Farage revealed Coutts, a luxury bank owned by NatWest, was planning to close his account.
Mr Farage claimed it was due to his political opinions, but a BBC article appeared soon afterwards claiming the account was closed for commercial reasons.
The bank’s former chief executive Dame Alison Rose resigned after she admitted she had spoken to a journalist about Mr Farage’s relationship with Coutts.
Asked whether it was reasonable for the banking giant’s board to say they had full confidence in Dame Alison after the reports emerged, Sir Howard said: “I continue to say that the judgment that we made at the time was a reasonable one.
“At the time what we also said was that we wanted an independent legal review, which we commissioned, to be able to satisfy ourselves what was said and what was not, because it was not remotely clear at the time.”
He was also pressed on whether the review carried out by lawyers on behalf of the bank should have interviewed Mr Farage.
Law firm Travers Smith found failures in how the bank treated confidential information and how it communicated with Mr Farage.
Sir Howard responded: “That was a matter for them as to what they thought they needed to understand about the decision-making processes within the bank, and I think it was a very thorough report, it was an independent report, and I have no reason to question the conclusion that they reached.”
