The market for new homes is being hit by rising interest rates, according to Britain’s two biggest housebuilders.

Just weeks away from completing their £4.3 billion merger to create Britain’s largest housebuilder, Taylor Woodrow and George Wimpey told investors that there would be “less buoyant market conditions in the second half of the year due to the impact of recent interest-rate changes and the effect of these on customer confidence”.

Whereas the outlook in Britain is uncertain, the American housing market, in which both companies have significant operations, remains resolutely grim. Wimpey and Woodrow said that the United States “has remained very challenging”, with buyer confidence being hit by concern about interest rates, as in the UK.

Britain’s househunters have had to endure four quarter-point rises in the cost of borrowing since last August. The Bank of England’s base rate of lending is now 5.5 per cent, but money markets have pencilled in another quarter-point rise by August. Borrowers now struggle to find a two-year fixed-rate mortgage deal at an interest rate much below 6 per cent.

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Taylor Woodrow, which last year sold 8,294 homes in the UK, expects to have a 5 per cent rise in the number of sales sites open over the year, but completions in the second half nevertheless are expected to be be only “similar to the first half”.

Taylor Woodrow told investors that its total forward order book is up 10 per cent year-on-year by volume and value. Wimpey, which sold 13,616 UK homes last year, said that its forward order book is up 5 per cent in volume, while margins are “showing good progress”.

Taylor Woodrow’s American order book at the half-year stage is down 45 per cent in sterling terms, while Wimpey’s US forward order book is 41 per cent lower than a year ago. Florida and California are the worst-hit states. Taylor Woodrow’s operations in Texas and Canada have held up.

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