In a recent interview, Sir Howard Davies, chair of NatWest, said: “I don’t think it’s that difficult at the moment” to get onto the property ladder.
Following the conclusion of the Help to Buy scheme and interest rate increases in 2023, Newspage asked brokers and property experts if they agreed with his statement.
Stephen Perkins, managing director at Yellow Brick Mortgages, said: “It is tiring reading such comments from people who bought their first house for around £10,000 with a minimal deposit and a mortgage at two to three times their income and who are completely out of touch with the challenges first-time buyers face getting on the housing ladder.
“Without help from the ‘Bank of Mum and Dad’ or inheritance, it is incredibly hard to save the £30,000 or so deposit often needed to be able to buy an average-priced house, especially if privately renting.
“There are many reasons the average age of a first-time buyer keeps increasing, and it is not because young people do not want to save money or are lazy or careless with their money. It’s because the deck is heavily stacked against them without support.
“Sir Howard Davies should be ashamed of these comments, especially given NatWest needed support themselves and is still 38% Government-owned.”
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, added: “Making such bold statements with absolutely nothing to back it up is 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 is totally out of touch with reality.”
Further reaction:
Marty Naan, mortgage and protection adviser at Marty Naan Mortgage Advice:
“Was there ever a more out-of-touch statement about homebuying?
“Telling first-time buyers “It’s not that difficult” is quite simply a slap in the face to people struggling to make ends meet, never mind save for a deposit on a mortgage.
“Sir Howard Davies seems to have forgotten what it is like to be young.
“In my local area, a standard three-bed semi might cost in excess of £500,000. A reasonable deposit therefore is £25,000.
“This mortgage of £475,000 would require income of at least £106,000.
“The discussion of ‘average’ house prices and ‘average’ interest rates is moot as homes, mortgages, deposits and interest rates are specific, not average.
“The UK mortgage market needs inspiring leaders, not out-of-touch dinosaurs who throw out blanket statements like this.”
Riz Malik, founder and director at R3 Mortgages:
“II find myself deeply at odds with his remarks. The previous year proved to be exceptionally tough for getting on the property ladder, a fact underscored by the lower number of mortgage approvals.
“Despite recent moves by lenders to lower rates, the situation remains precarious due to rising tensions in the Middle East.
“Furthermore, the termination of the Help to Buy scheme has resulted in even scarcer options for first-time buyers.
“We all appreciate that increasing savings and deposits is the answer but with rents at an all-time high and the cost-of-living crisis, that is easier said than done.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“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, where first-time buyers have been shafted for the past decade due to the competition they face from landlords and where in-work poverty has ballooned out of all proportion at the same time as food bank usage has rocketed.
“Those in their ivory towers ought to keep their thoughts to themselves when they haven’t got the first clue about how difficult it is for people to take their first step onto the ladder.
“We’ve got a generation of people that will never be able to own their own home, and to say something as flippantly as this rubs salt into their wounds.”
Matthew Jackson, director at Mint FS:
“If I was on the board of NatWest I would question the position of the chairman.
“Clearly his privileged upbringing has left him with a tenuous grip on reality.
“Whilst his comments around 100% lending and the risks of this to lenders and borrowers alike are accurate, the combination of house prices, wage stagnation, cost of living and other factors like the scaling back of schemes to assist first-time buyers like Help to Buy mean that there has never been a more challenging time to get on the housing ladder.
“Fortunately for first-time buyers, brokers do understand the challenges, pressure and obstacles they will encounter and will hold their hand to navigate the minefield that is placed in their path.”
Justin Moy, managing director at EHF Mortgages:
“Getting onto the property ladder has been an increasingly difficult challenge over the last decade, with average property prices around seven to eight times average incomes, compared to when the NatWest chairman perhaps bought his first property.
“With a variety of purchase schemes withdrawn or tempered down over the years, the opportunity to buy is difficult and with higher rents it’s not easy to budget for normal bills, let alone save for a deposit.
“Reliance on gifted deposits continues to be at its highest, rates are high for those with smaller deposits, and the cost of living is a huge challenge for borrowers old and new.
“Howard Davies needs to sit on the mortgage desk in one of his branches to get a real understanding of first-time buyers and their challenges.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“NatWest has always been over-cautious, and some would say way off the mark.
“NatWest also confirmed house prices would fall 25% as a consequence of the Covid outbreak in 2020, they were also the first of the Big Six lenders at that time to refuse any self-employed applications – which subsequently 2021/22 business was maintained along with house prices so reactive comments from NatWest, we have to take with a pinch of salt, as may not be reflective with what is happening at ground level.”
Rohit Kohli, director at The Mortgage Stop:
“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.
“It’s not just what has happened over the last couple of years but has been a systemic problem for over a decade with house prices booming whilst wages stay flat.
“It’s just another example of elitist thinking blaming your average Joe. I’d suggest Sir Howard Davies come out of his ivory tower and spend some time in reality instead.”
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management:
“Sadly, I can’t agree with Sir Howard. Whilst I do not see affordability as a huge barrier currently for many people, deposit remains a big issue.
“One lender is offering 100% mortgages in the mainstream market, and that has caveats. There are another one or two offering the same in the Shared Ownership space.
“Many lenders do offer a 5% deposit option, but 5% of even a modest property is still an awful lot of money for people to save.
“Support schemes post Help-To-Buy are non-existent in the main, other than Shared Ownership which is not well publicized and is misunderstood or unheard of with many potential homeowners.
“If this is a market where getting on the housing ladder is “not that difficult” I would hate to see Sir Howard’s version of people struggling.”
Jack Tutton, director at SJ Mortgages:
“His statement will come across as extremely out of touch to the majority of first-time buyers that we speak to, I think a lot of them would be disappointed to hear this coming from someone working at a large lender such as NatWest.
“With the average UK house price at around £290,000, most people would need at least £14,500 plus costs to purchase a property.
“With the cost-of-living increases that we have seen recently, saving this amount of money can be a real challenge especially if the person is renting at the same time.
“I think this does reflect a huge gap in understanding between what we hear from our customers and what institutions believe.”
Adam Smith, founder at Alfa Mortgages:
“Man needs a dose of reality!”
Ken James, director at Contractor Mortgage Services:
“This out of step comment but someone who clearly does not need a mortgage in this day and age.
“For someone who has been around the financial markets for as long as Sir Davies has it’s a surprising comment to make.
“He truly does not have any real depth of understanding of how difficult people are finding it to both manage the cost-of-living crisis and also save for the deposit required to buy and any related taxes.
“Prospective buyers do need to look at their spending habits and realize that if they want to build a deposit, they may have to make sacrifices, not everyone is prepared to do this and that’s why renting is an option and also if possible living with family.
“We have to be realistic this is not the easiest time in history for buyers or sellers and these dinosaurs of the economy have to stop commenting on matters that they no longer understand.”
Elliott Culley, director at Switch Mortgage Finance:
“PR disaster for NatWest. It’s not surprising to hear out-of-touch comments, about how difficult getting on the ladder is.
“On average, the cost of a typical UK house was found to be 6.7 times average earnings.
“Yes, people need to save but the amount is now far greater than it has ever been.”
Graham Cox, founder at Self Employed Mortgage Hub:
“I don’t know what rarefied air Sir Howard is living in, but he clearly knows nothing of the reality for many young people in this country.
“House prices are around eight times average earnings, which is almost twice the historical average.
“The proportion of UK adults who own a home has dropped to 50% from 63% in less than a decade.
“Youngsters come out of university with huge student loans, are then expected to raise tens of thousands for a mortgage deposit, whilst stuck in expensive, insecure and often poorly maintained private rented accommodation.
“Doesn’t exactly sound like a walk in a park, does it?”
Amit Patel, adviser at Trinity Finance:
“Sir Howard Davies is an imbecile and is completely deluded.
“High-paid company executives and our politicians are all living in some fantasy land where they have enough money to feed generation after generation.
“He needs to get off his high horse and spend a week in the Northern Towns where unemployment is sky high and people are reliant on food banks and tell the good of folk ‘if you want to buy a house, you must save up for a deposit.’”
Mike Staton, director at Staton Mortgages:
“Getting onto the property ladder is much more difficult than in the past.
“Lower wages, higher cost of living, stricter regulations, and higher house prices all contribute to affordability and saving issues.
“To state that it is easier compared to a time when you could write your salary on a post-it note and the lender would take it as gospel.
“Maybe Sir Davies would welcome the old times back, that way they can avoid fines of £20.7m for poor mortgage advice in the past.
“His comments stink of a person who is so out of touch with the current public situation that is painful.
“If ever there was a reason to not go direct to your bank Sir Howard has just published it.”
Charles Breen, founder at Montgomery Financial:
“How out of touch with reality some people are is genuinely flabbergasting!
“The lived reality of some people especially higher up on astronomical salaries compared to ordinary people just wanting to get on the property ladder or secure their family’s futures.
“It’s typical tone-deaf, dingbat elitist comments from someone who should know a lot better and knows that words from someone in his position have weight and implications.”
Jonathan Burridge, founding adviser at We Are Money:
“A note for their PR Director: it is probably not wise for a Knighted director of a behemoth bank with a salary package of millions of pounds to comment on the financial issues faced by the other 99% of the population, especially those that have seen rampant property price inflation for over a decade and spiralling inflation.”
