Redrow chairman criticises 'mortgage famine'

The boss of one of Britain's biggest housebuilders today hit out at regulators for creating a mortgage famine and risking the economic recovery.









Requirements that banks should be forced to hold on to more of their money and proposals for new rules on mortgage lending are stifling the housing market, said Steve Morgan, the founder of Britain's fifth biggest homebuilder Redrow.



"Our message to the Government is simple: the regulators are going too far and the medicine risks killing the patient," he said. "A generation of young people are being denied the opportunity to buy a home and that's not fair."



Mr Morgan claimed that a "mortgage famine" had been created in the UK because lenders were subject to new international rules that banks should be forced to hold on to their cash, and part-nationalised lenders were preparing to repay loans to the Government.



As a result, mortgage lenders were increasingly risk averse and were insisting on deposits of 25% or more, an unrealistic amount of money to expect most first-time buyers to stump up.



The situation could be made worse under the FSA's proposed tightening of the rules that would impose tougher affordability tests and limit interest-only mortgages.



"Every week we are forced to turn away potential purchasers simply because they do not have a deposit of 25% or more - people with excellent jobs who under normal circumstances would easily qualify for a mortgage," said Mr Morgan, who also owns Wolverhampton Wanderers Football Club.



"The case for resolving the mortgage crisis is compelling as we cannot have a buoyant UK economy without a healthy housing market."



The number of mortgages available to buyers with deposits of 10% or less has fallen from 1,244 to 33 in the last three years, he claimed.



He called for lenders to return to asking for deposits of 5%, which he claimed would stimulate demand for new homes, create some 600,000 new jobs and deliver further taxes to the Government.



The chairman of the Flintshire based company accused the Government of deliberately suppressing the housing market, which was "laying the foundation for the next boom/bust cycle".



The Government should offer financial guarantees to lenders to encourage them to offer mortgages at more favourable rates of interest to people with small deposits, he said.



His comments come as new figures released today from the Halifax show that the average price of a home rose by 1.8% in October but the number of transactions were at half their normal level.



But Mr Morgan said house prices had actually been very stable over the past year and that fluctuations indicated by surveys were caused because of the small number of transactions.



Despite the mortgage drought, Redrow's turnaround continued, as a result of building more expensive family homes Mr Morgan, told the company's AGM in Flintshire today.



Sales of homes in the 18 weeks to the end of October were up 9% year-on-year to £133 million.



The average price of homes sold by Redrow was up 16% from a year ago to £174,000.



Redrow currently owns enough land to build 13,000 plots, which will secure its supply of new homes for the next five years.



It made pre-tax profits of £700,000 in the year ending June 2010 - its first profit for three years. It had made a loss of £44.2 million in the previous year.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there