Chancellor Jeremy Hunt has said he “didn’t understand” how NatWest’s chairman could have claimed that it was not a difficult time to buy a home.
Sir Howard Davies later said he “did not intend to underplay the serious challenges” people face buying homes following his earlier suggestion in an interview.
Speaking in an interview for The Martin Lewis Money Show Live, Mr Hunt said: “I just don’t really understand how he could have said that. When I am looking at the pain that families are going through because they’ve seen interest rates go up to five and a quarter percent, mortgage rates go up by considerably more than that if they have to change it. So I think people are finding it very difficult and we are seeing that in the volume of house transactions that are happening.”
The major retail bank chairman had also said that prospective buyers have to save, and that “is the way it always used to be”.
It provoked outrage, including from campaign group Generation Rent, which said his claims showed he was out of touch with the reality faced by many people attempting to buy a home.
Clarifying his remarks, Sir Howard said: “Given recent rate movements by lenders there are some early green shoots in mortgage pricing and 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 realise it did not come across in that way for listeners and as I said on the programme, I do recognise how difficult it is for people buying a home and I did not intend to underplay the serious challenges they face.
“People have to save much more than they did in the past and that is tough for first-time buyers.
“The role for banks in today’s environment is to lend responsibly and support customers to build a savings habit and move towards home ownership.”
Figures from the Office for National Statistics (ONS) show how much house prices have grown over the last decade.
Full-time employees in England could expect to spend around 8.3 times their annual earnings buying a home in 2022, according the ONS.
A decade earlier, the figure was 6.8, while 25 years ago, in 1997, it was 3.5.
The trend is similar in Wales, though the affordability gap is not quite as large, standing at 6.2 times annual earnings in 2022, up from 5.6 in 2012 and 3.0 in 1997.
Across England and Wales, while average earnings doubled between 1997 and 2022, average house prices increased by four and a half times.
“Over the last 25 years, housing affordability has worsened in every local authority, especially in London or surrounding areas,” the ONS added.
