The chief executive of Generation Rent has slammed the chair of the NatWest Bank for comments over first time buyers.
At the start of the weekend Sir Howard Davies told the BBC that people have always had to save for a deposit but admitted they had to save more today.
He warned of the dangers of "very easy access to mortgage credit" and suggested that one lesson of the banking crisis over a decade ago was that people should not over-borrow and find themselves in negative equity should house prices fall.
Asked when he thought it would be easier for people to get on to the property ladder in the UK, Sir Howard said: "Well, I don't think it's that difficult at the moment. You have to save, and that's the way it always used to be. What we saw in the financial crisis was the risk of having people being able to borrow 100 per cent 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, very easy access to mortgage credit.”
Generation Rent’s Ben Twomey blasted the comments in a sharply-worded statement.
“What planet does he live on? This is astounding to hear from a senior banker” says Twomey.
“We are in a cost of renting crisis, that is making it incredibly hard for people to buy a home as we hand a third of our wages every month over to our landlord. Interest rates have increased but house prices have yet to correct, meaning we still need to save for a huge deposit but also would need a high income to afford monthly mortgage repayments.
“Sir Howard recognises the need to save, and blames the response to the 2008 financial crisis for this. But the situation has got far worse since the credit crunch. In 2012, it took 6.8 years for the average earner to save a deposit in England, but in 2023 this had increased to 9.6 years. In that time, the average price of the first home had gone up by 72 per cent and average rents are up by 29 per cent.
“Banks can’t keep blaming mortgage regulations for the plight of first time buyers. It is the result of the government’s failure to keep rents and house prices under control. We need to be building more homes in the places where people want to live, especially social housing, to ease the pressure on rents and keep more cash in renters’ pockets. The first step to solving the housing crisis is recognising that we have a problem, and a very serious one too.”
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