Taylor Wimpey warns jumps in mortgage rates weakened housing market
It came as the FTSE 100 giant revealed a plunge in sales and profits for the past six months.
Housebuilder Taylor Wimpey has cautioned that higher mortgage rates have increased concerns over whether potential customers can afford to buy.
It came as the FTSE 100 giant revealed a plunge in sales and profits for the past six months.
Nevertheless, the company also told shareholders on Wednesday it is building properties “slightly ahead” of forecasts.
Taylor Wimpey said it saw an “encouraging” start to 2023 despite borrowing costs, but market conditions “weakened” in the second quarter.
It said it was particularly impacted by a sharper increase in mortgage costs in June after the Bank of England hiked the base interest rate from 4.5% to 5%.
The first half of the year has been characterised by variable market conditions including substantially higher mortgage rates
The update comes a day before the central bank is expected to announce its 14th increase in a row in its efforts to drag down inflation, with economists widely expecting a rise to 5.25%, with further increases still expected.
On Tuesday, Moneyfacts had reported the average two-year fixed mortgage deal was 6.85% while the average five-year fixed deal was 6.37%.
The housebuilder posted a 21.2% plunge in revenues to £1.64 billion for the six months to July 2, compared with the same period last year.
It also revealed its pre-tax profit dropped by 28.9% to £237.7 million for the half-year.
The group told shareholders that despite difficult market conditions, it has made strong progress on house builds and expects to complete between 10,000 and 10,500 homes by the end of the year.
Chief executive Jennie Daly said: “The first half of the year has been characterised by variable market conditions including substantially higher mortgage rates.
“While this has inevitably impacted our results, I am pleased that we have delivered a resilient performance, with first-half completions slightly ahead of our expectations.
“This performance is testament to the hard work of our teams on the ground and our strong focus on operational excellence and tight cost management.”