Article: it was released on June 8, 2023

People inspecting a place

If interest rates keep rising, a housebuilding company has warned that the housing market may slow down even more.

Potential first-time buyers, according to Crest Nicholson, are having difficulty as a result of rising borrowing costs and the termination of the Help to Buy program.

The business urged the government to give prospective homeowners more assistance.

It made these remarks as it released financial results and revenue figures for the six months ending in April.

Crest Nicholson claimed that the fallout from last year's mini-budget in September, when mortgage rates spiked and lenders yanked hundreds of deals, had hurt trading during this time.

According to the report, this caused consumer confidence to "rapidly decline" and "immediately translated into softer demand in the housing market.".

Pre-tax profits fell by 60% to £20.9 million during the six-month period, while revenues dropped to £282.7 million, down 22.4 percent from the prior year.

Despite the rocky beginning, the builder claimed that buyer confidence had begun to return.

But it claimed that the end of Help to Buy and higher mortgage rates were preventing some first-time buyers from stepping onto the housing ladder.

According to the report, "if interest rates rise and stay high for an extended period of time, this will undoubtedly exacerbate this issue and start to impact demand and confidence again.".

"We continue to urge the government to acknowledge this difficulty and offer additional assistance to these prospective homeowners. ".

The government of England offered a loan for up to 20% of a property's value (or 40% in London) under the Help to Buy program, but only for newly constructed homes. This, however, stopped accepting new applications in October of last year.

The Halifax also stated earlier this week that confidence was being harmed by higher mortgage rates after reporting the first annual decline in house prices in 11 years.

As lenders predict the Bank of England will increase rates higher than initially anticipated, from their current 4 point 5 percent to as high as 5 point 5 percent, borrowing costs have been rising in recent weeks.

The increases are anticipated because the rate of inflation, or how quickly prices rise, is still stubbornly high.

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