UK

NatWest Chair Sparks Anger for Saying It’s Not Hard to Buy a Home


William Shaw
Fri, January 5, 2024 



(Bloomberg) -- NatWest Group Plc Chairman Howard Davies is facing backlash after saying he believed it wasn’t “that difficult” for UK consumers to obtain a mortgage.

The fact that consumers have to save more before purchasing a home is due, in part, to changes introduced to better protect consumers in the aftermath of the financial crisis, Davies said in an interview with a BBC radio program. Back then, he argued, it was dangerous for consumers to have “very, very easy access to mortgage credit.”

“I don’t think it’s that difficult at this moment,” to get on the property ladder, he said. “There are people who are finding it very difficult to start the process. They will have to save more but I think that is inherent in the change in the financial system as a result of the mistakes that were made in the last global financial crisis and we have to accept we are still living with that.”

In a subsequent statement, Davies said he didn’t intend to “underplay the serious challenges” that consumers face when buying a home and that he recognizes it “is tough for first-time buyers” to save up for a house.

Davies was previously chairman of the UK Financial Services Authority and deputy governor of the Bank of England.

The earlier comments to the BBC drew a barrage of opposition.

“Many, many people will find those remarks quite out of touch with the situation that they and their family face,” UK shadow chancellor Rachel Reeves said in an interview with GBNews. “There are many people who are struggling to get on the housing ladder because of higher interest rates.”

Nigel Farage, the broadcaster and political pundit whose account with NatWest unit Coutts was closed last year, tweeted that Davies has “no idea about NatWest’s customers or the real world.” Richard Murphy, a professor of accounting practice at Sheffield University Management School, and Prem Sikka, an emeritus professor at the University of Essex and a lawmaker in UK Parliament, also criticized the comments.

“It really is that difficult to buy a house at the moment,” Dan Wilson Craw, deputy chief executive at Generation Rent, which advocates for private renters, said in a post. “Prices haven’t come down far enough to reflect higher interest rates, which mean you still need a high income to clear affordability criteria, and still need a large deposit.”

UK home prices have continued to soar as a shortage of available properties offsets painfully high mortgage rates. Last year, one measure of home affordability reached its worst level since the Victorian era as average house prices were nine times average income in the UK.

“Given recent rate movements by lenders, there are some early green shoots in mortgage pricing,” Davies said in the statement. “While funding remains strong, my comment was meant to reflect that, in this context, access to mortgages is less difficult than it has been. I fully realize it did not come across in that way for listeners.”

--With assistance from Aisha S Gani.

Bloomberg Businessweek