Housebuilder Barratt warns outlook ‘less certain’ amid interest rate rises

Housebuilder Barratt said its outlook for the year is “less certain” amid rising interest rates but revealed it expects completions to be in line with the previous financial year.

The London-listed firm told shareholders that pre-tax profits are set to be in line with expectations despite market uncertainty.

It came as the company reported 188 private reservations per average week over the period from July 1 to October 9, falling from 281 over the same period last year.

The group said the lower reservation rate “reflects customer response to increased wider economic uncertainty, where growing cost-of-living concerns have been compounded by increased mortgage interest rates and reduced mortgage availability”.

Interest rates were increased to 2.25% – the highest in 14 years – last month as the Bank of England seeks to grapple soaring inflation.

Mortgage lenders have also pulled hundreds of mortgage deals since the Chancellor announced his mini-budget amid growing concerns over borrowing costs.

On Tuesday, Moneyfacts.co.uk said the average five-year fixed-rate mortgage climbed to 6.29% and is expected to weigh on demand.

Nevertheless, Barratt hailed a strong forward order book and rising selling prices.

The group said that average selling price across the order book was at £377,200 at October 9, compared with £344,300 a year earlier.

David Thomas, chief executive of Barratt, said: “We continue to see strong levels of interest across the country, however, private reservations remain below the level seen in full-year 2022 as customers react to the wider economic uncertainty.

“While the outlook for the year is less certain, we remain on track to deliver adjusted profit before tax for the year in line with current consensus.

“We are focused on maintaining our commitment to lead the industry in the quality, energy-efficiency and sustainability of our homes and in our customer service, all of which are fundamental to our ongoing success amid a more challenging market backdrop.”