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One in every of Britain’s greatest housebuilders mentioned the share of its first-time consumers taking over greater than 36-year mortgages had greater than tripled, as affordability points within the housing market took its first-half income down by 29 per cent.
Taylor Wimpey mentioned on Wednesday that 27 per cent of its first-time consumers had taken mortgage phrases of greater than 36 years within the first half of the yr, in contrast with simply 7 per cent in 2021.
The proportion of different consumers taking out mortgages of greater than 30 years rose to 42 per cent, from 28 per cent in 2021.
“As affordability has turn into extra stretched we have now seen mortgage period improve,” mentioned chief government Jennie Daly, including that the top of the federal government’s help-to-buy scheme this yr was a contributing issue.
Hovering borrowing prices on account of rising rates of interest have piled stress on the housing sector, with UK home costs recording their biggest annual drop in 14 years in July, in line with knowledge from Nationwide on Tuesday.
Within the wake of successive rises within the Financial institution of England base fee, to five per cent in June, first-time consumers have sought aid within the type of longer-term mortgages. A document 19 per cent of first-time consumers took out mortgages of at the least 35 years in March, in line with commerce physique UK Finance, up from 9 per cent a yr earlier.
Nicholas Mendes, mortgage technical supervisor at dealer John Charcol, mentioned 25-year mortgages had been the norm traditionally, however first-time consumers particularly had been now spreading their debt over 30 years or extra to cut back month-to-month funds, finally borrowing extra in the long run.
Laura Suter, head of private finance at funding platform AJ Bell, mentioned the development was “worrying” and will have a long-term influence on retirement financial savings.
Taylor Wimpey posted £237.7mn in pre-tax revenue in its first half, a 28.9 per cent fall yr on yr, as larger borrowing prices dented demand for houses within the second quarter.
“The primary half of the yr has been characterised by variable market situations together with considerably larger mortgage charges,” mentioned Daly, including that this had “inevitably” affected the group’s outcomes.
Taylor Wimpey accomplished 5,120 houses within the six months to June 30, down from 6,922 in the identical interval final yr. However it expects to construct between 10,000 and 10,500 houses for the complete yr, on the higher vary of its earlier steerage. The corporate mentioned there remained “sturdy underlying curiosity” from consumers, regardless of the troublesome financial local weather.
Shares in Taylor Wimpey rose 2 per cent in early buying and selling on Wednesday.
The FTSE 100 housebuilder mentioned its common promoting value elevated 6.7 per cent to £320,000 in contrast with the identical interval final yr.
Information from the BoE on Monday confirmed a slight rise in mortgage approvals in June, which analysts attributed to exercise that predated the most recent improve in borrowing prices.
Taylor Wimpey mentioned it could reward shareholders with an interim dividend of 4.79p a share.
