January 5th 2024.
Sir Howard Davies, the chairman of NatWest, recently commented on the issue of first time buyers and their difficulty in getting onto the property ladder. He was speaking on BBC Radio 4's Today Programme when he said that it was not as difficult as people think.
Sir Howard suggested that the key to success in buying a house was to save up money. He said, "You have to save and that is the way it always used to be." This statement was made in response to the typical house price in the UK, which has risen to £287,105 in December 2023 from £282,305 in the same month a year earlier.
Sir Howard then went on to explain that, during the financial crisis, people were able to borrow 100% and purchase a house, but then suffered severe falls in equity value. He said, "What we saw in the financial crisis was the risk of having people being able to borrow 100% in order to get onto the property ladder, and then suffering severe falls in the equity value of their houses, and having to leave and having a bad credit record. So, there were dangers in very easy access to mortgage credit."
Nigel Farage, however, disagreed with Sir Howard's statement and said that it was nearly impossible for young people to get on the property ladder. He said, "It is all but impossible for young people to get on the property ladder, and what that has done is it has destroyed the culture of thrift."
In response to this, Ben Twomey, the chief executive of the campaign group Generation Rent, said, "What planet does he [Sir Howard] live on? This is astounding to hear from a senior banker." He went on to explain the issue of rented property and how people were having to pay a third of their wages every month to their landlords, making it hard to save for a deposit.
Sir Howard also faced questions about when Coutts, his former bank, planned to close Mr Farage's bank. He said that the decision was made on reasonable grounds and they commissioned an independent legal review to ascertain exactly what was said. When asked if the review should have interviewed Mr Farage, Sir Howard responded, "That was a matter for them as to what they thought they needed to understand about the decision-making processes within the bank, and I think it was a very thorough report, it was an independent report, and I have no reason to question the conclusion that they reached."
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