Barratt reports slump in new home orders as mortgage rates rise
Barratt Developments has reported a slump in reservations of new homes in recent weeks, as the housing market is hit by economic uncertainty and rising mortgage rates.
Shares in Britain’s largest housebuilder tumbled by as much as 8% in early trading on Wednesday, the biggest faller on the FTSE 100, and dragged down the share prices of its housebuilding rivals after it warned of a “less certain” outlook.
Shares in Persimmon were 5% lower in early trading, the second largest FTSE 100 faller, while Taylor Wimpey’s shares were down 3%.
Barratt said the average weekly number of net private reservations of properties had fallen by a third to 188 between 1 July and 9 October, compared with 281 in the same period last year. It said the decline highlighted customers’ caution about economic uncertainty, coupled with cost of living pressures, higher mortgage rates and reduced availability of mortgages.
Britain’s housing market has started to slow in recent months, as rapidly increasing borrowing costs have made buying a property unaffordable for more people.
Halifax predicted earlier in October that UK house prices will be pushed down more sharply in the months ahead by rising mortgage rates and the broader cost of living crisis, as it reported prices dipped by 0.1% in September.
This month the interest rate on the average five-year fixed mortgage deal topped 6% for the first time in 12 years. The average rate on two-year fixed rate also passed the 6% mark, the first time it has done so since 2008. Barratt said in a statement to the stock market: “The outlook for the year is less certain with the availability and pricing of mortgages critical to the long-term health of the UK housing market.”
The company said it expected to deliver
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