HOUSEBUILDER Taylor Wimpey signalled it will report a major hike in profits even though mortgage availability remains restricted.

It said it is hopeful the Bank of England's funding for lending scheme will improve mortgage conditions for consumers.

The company further noted it has recently seen some major lenders reduce their mortgage rates and was keen for that trend to continue.

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That came at Taylor Wimpey predicted a 40% rise in operating profit across 2012 with full-year profits at the upper end of expectations. Operating margin is expected to come in ahead of the 8.8% booked in 2011 and the 11.1% recorded in the first half of 2012.

The performance has been driven by a 7% increase in house completions to 10,886 with average selling prices up 6% to £181,000 overall and by 6% to £197,000 when just considering private sales.

The net private weekly reservation went from 0.54 homes per outlet to 0.58 with cancellation rates down from 15.8% to 15.2%.

The order book at the end of 2012 was at £948 million and 5966 homes which was ahead of the £835m and 5379 residences recorded at the close of 2011. The UK Government's FirstBuy scheme had been used in 1203 first time buyer sales in the year.

The English NewBuy and Scottish Government backed MI New Home schemes – offering 95% mortgages – were used in 546 sales.

Pete Redfern, chief executive, hailed 2012 as a year of "significant progress and said: "We are delivering on the strategy that we set out in 2011, including a return to UK double digit operating margin ahead of schedule."

Mike van Dulken, head of research at Accendo Markets, said: "The observation that the [full year] group operating margin will be better than 2011's 8.8% and [the first half of] 2012's 11.1%, and back at double-digit levels, also suggests continued strong improvement in profitability in [the second half] of last year – in an environment of pricing pressure this is a welcome message.

"Management's outlook points to better consumer confidence in the first fortnight of 2013, and while it is much too early to extrapolate for the full year given the myriad moving parts which can affect the global markets consumers' ability/desire to buy property looks solid."

Shares in Taylor Wimpey were down 1.2p at 73.05p.