Crest Nicholson warns on impact of higher rates as profits slump 60%

(Sharecast News) - House builder Crest Nicholson day warned that more interest rate rises would hit the property market, after it posted a slump in half-year profits. The company called on the government to help people struggling to get on the market due to higher mortgage costs and the cost-of-living crisis as lenders also pull loan deals.

Pre-tax profit for the six months to April 30 fell 60% to £21m.

Analysts expect the Bank of England to lift rates again, after a smaller-than-expected fall in the April inflation rate saw lenders withdraw of increase mortgage prices.

If interest rates continued to remain elevated for a sustained period of time, it would make market conditions worse and would impact demand and confidence again, said Crest Nicholson chief executive.

"The ongoing lack of housing supply is continuing to support house prices and these factors are also driving strong levels of rental inflation," he said.

"The economic case for buying a home therefore remains compelling, but for many first time buyers the higher cost of borrowing and the cessation of Help to Buy are prohibitive to realising this ambition."

"We continue to call on government to recognise this challenge and provide further support to these potential homeowners."

Reporting by Frank Prenesti for Sharecast.com