Sir Howard Davies: Not that difficult to buy a home, says NatWest chair

NatWest’s chair has said he believes it is not currently “that difficult” for people to get on the housing ladder.

Sir Howard Davies said people have always had to save for a deposit but admitted you had to save more today.

He told the BBC he recognised people were “finding it difficult to start the process”, but warned of “dangers” in “very easy access to mortgage credit”.

But critics said his comments on the Today programme were “astounding” and “out of touch with reality”.

“What planet does he live on? This is astounding to hear from a senior banker,” said Ben Twomey, chief executive of campaign group Generation Rent.

Katy Eatenton, a mortgage and protection specialist at Lifetime Wealth Management, called Sir Howard’s comments “ludicrous”.

“The cost of living is the highest it has been, rents are increasing year on year and house prices, interest rates and the lack of first-time buyer schemes are all adding to the difficulty in getting on the property ladder.

“Sir Howard Davies is totally out of touch with reality,” she said.

The average price of a property in the UK is currently £287,105, according to figures released on Friday by Halifax, the UK’s biggest mortgage lender.

Typically, borrowers need a deposit worth at least 10% of a property’s value to get a mortgage. With the gap between house prices and average earnings widening over decades, saving enough money to put down initially is the biggest hurdle for many hoping to buy a home.

It is also one factor in why the average age of a first-time buyer has risen to 32.

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.”

Pressed further on his reasoning, the NatWest chair admitted people had to save more, but said it was also due to fundamental changes in the housing market seen in the wake of the financial crisis.

“What we saw in the financial crisis was the risk of having people being able to borrow 100% 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,” added Sir Howard.

He has been chair of the bank, which is 39%-owned by the taxpayer, since 2015, having previously held positions as the deputy governor of the Bank of England and chairman of the UK Financial Services Authority.

He receives a salary of more than £750,000 a year and is due to stand down from his role at NatWest in April.

While people have to save more cash for a deposit, the rising cost of living has hindered many people’s ability to set money aside with energy bills and food costs soaring in recent years.

Inflation – the rate prices rise at – hit a 40-year high in 2022 and as a result, the Bank of England has increased interest rates to try to slow it down, making the cost of borrowing money more expensive.

Renters hoping to save for their own home have also seen their monthly outgoings rise sharply, with a new let costing £1,201 a month on average, according to Zoopla. High demand has driven the increase, while supply has also narrowed with some private landlords selling up as a result of higher mortgage rates.

Mr Twomey, of Generation Rent, said the cost of rent was making it “incredibly hard” for people to buy a home, with tenants handing “a third of our wages every month over to our landlord”.

He argued while Sir Howard recognised the need to save for a deposit, the circumstances were now “far worse”, with the time required for the average earner in England to save enough increasing to almost 10 years.

He said more homes needed to be built, including social housing, to ease pressure on the market.

Torsten Bell, boss of the Resolution Foundation think tank which focuses on improving living standards for those on low to middle incomes, said it was “increasingly not true” that people save for a house deposit, due to half of first-time buyers in their 20s getting help of an average of £25,000 from their parents.

Prior to Sir Howard’s comments, Mr Bell said the most common living arrangement for an adult aged between 18 and 34 in 1997 was “being in a couple with children”.

“Today the most common is… living with your parents,” he posted on X, formerly known as Twitter.

There are signs pressure on mortgage-holders is easing, with several big lenders announcing cuts in recent days, though many homeowners coming off fixed-rate deals will still face big repayment increases.

On Friday, the average two-year fixed rate stood at 5.83%, while a five-year deal was 5.43%, according to financial information service Moneyfacts.

Kim Kinnaird, director at Halifax Mortgages, said with mortgage rates easing, buyers’ confidence could increase in the coming months.

Halifax said house prices rose for the third month in a row to average £287,105 in December, but it forecast a fall this year with buyers perhaps becoming more cautious due to economic uncertainty.

While Halifax is the UK’s biggest mortgage lender, its figures only take into account buyers with mortgages – about two-thirds of all sales – and do not include those who purchase homes with cash or buy-to-let deals.

Separate figures from the Bank of England published on Thursday showed the number of mortgage approvals rose slightly in November, which could be seen as a sign of a touch more confidence from buyers late last year.