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Housebuilders aren't worried about an interest rate rise because people can afford it

Nov 16, 2015, 13:29 IST

A &quotnail house", the last building in the area, sits in the middle of a road under construction in Nanning, Guangxi Zhuang Autonomous Region April 10, 2015.Reuters

Housebuilder Taylor Wimpey is having a great year.

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A lot of this is due in part to the Bank of England holding interest rates at record lows since 2009, which makes mortgages more affordable.

While Governor Mark Carney may not be raising rates this year, or even next year, at some point the loose monetary policy will come to an end.

Taylor Wimpey isn't particularly worried though. Homeowners can afford it.

"Against a backdrop of rising real incomes and tighter mortgage regulation with good availability and affordability, we believe that consumers have resilience to future interest rate movements," Taylor Wimpey said in a trading update on Monday.

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The Bank of England last year put a limit on the number of mortgages exceeding 4.5 times a borrowers income, which make defaults and losses less likely in the future.

"As we look forward, we are particularly pleased to see that the tighter lending requirements are helping to ensure that monthly payments remain affordable and sustainable, which contributes towards a healthy outlook for both homebuyers and homebuilders," Chief Executive Pete Redfern said.

The company said it would boost profit margins by 200 basis points this year. It has hit its 2015 sales targets already and starting on 2016.

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