Housebuilder Taylor Wimpey reveals demand has been knocked by rising mortgage rates

Nevertheless, the company also told shareholders on Wednesday it is building properties “slightly ahead” of forecasts.

Taylor Wimpey said it recorded 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 per cent to 5 per cent.

On Tuesday, Moneyfacts had reported the average two-year fixed mortgage deal was 6.85 per cent while the average five-year fixed deal was 6.37 per cent.

The housebuilder posted a 21.2 per cent plunge in revenues to £1.64bn 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 per cent to £237.7m 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.”

Oli Creasey, equity research analyst at Quilter Cheviot, said: “Taylor Wimpey’s half year results show a resilience that is likely to surprise the market on the upside.

"It is notable that the company is remaining in a broadly steady state – the net cash position is largely unchanged, as is the size of the landbank, despite the operational pressure being felt.

"The UK housing market remains under pressure. However, Taylor Wimpey is demonstrating that it can still function effectively under this pressure.”

Richard Hunter, Head of Markets at interactive investor, commented: “The update provides further proof, if it were needed, of the tightening shackles which the housebuilders are currently facing. A brief bounce in fortunes due to the traditionally strong spring selling season was largely undone by a further interest rate rise, which in turn resulted in higher mortgage rates.”