Redrow chairman Steve Morgan says there is a desperate lack of affordable motgages
Redrow chairman Steve Morgan has warned the coalition government that the lack of affordable mortgages risks fuelling the next boom and bust cycle in the housing market.
On the same day that the firm announces a rise in sales of 9% compared to this time last year, Morgan launched a stinging attack on the lack of mortgages for first time buyers saying that the case for resolving the mortgage crisis is compelling and that the UK cannot have a buoyant economy without a healthy housing market.
Morgan said: “For generations 95% mortgages have been the norm. Indeed the vast majority of existing home owners started out buying their first home with a mortgage of this size. Yet the current generation of first time buyers are being denied the opportunity that their parents and grandparents took for granted, simply because they are unable to secure an affordable mortgage with a modest deposit.”
Redrow says the demand for new homes remains strong, but with only six lenders now covering over 90% of the lending market, the mortgages to meet that demand are not available.
Morgan added: “Our message to the government is simple: the regulators are going too far and the medicine risks killing the patient. Deliberately suppressing housing demand at the very time that the country has a chronic housing shortage is laying the foundations for the next boom/bust cycle.
“The way to end the cycle of boom and bust is to increase the supply of new homes to meet the demand by freeing up the supply of affordable mortgages”.
In an interim management statement Redrow says that sales of private homes in the financial year to date are up 9% up on the same period last year at £133m, which has been achieved on 6% fewer reservations. The average price of private reservations is £174,000, slightly ahead of the firm’s expectations and around 16% ahead of the same period last year.