The Bank of England is “penalising the young” by keeping rates on 95pc mortgages artificially high, the boss of one of Britain’s biggest housebuilders has warned.

Rob Perrins, chief executive of Berkeley Group, said the Bank has “a moral duty” to cut rules that require lenders offering riskier mortgages to hold a certain amount of capital on their balance sheet. 

Mr Perrins added: “Whoever wins the next election will need to look at it. I think the Bank has been overly focused on stability for a long period of time. It’s a balance and you do need to have some risk in the economy. The banks are incredibly well capitalised.”

Higher capital requirements for higher risk loans are one of the reasons why lenders charge higher interest rates on mortgages to buyers with smaller deposits.

Mr Perrins said: “It is a societal issue that the Bank of England needs to move away from stability to growth. I think they have a moral duty to do it.”

The average rate on a two-year fixed rate mortgage for a buyer taking out a 95pc mortgage on Wednesday was 6.25pc, compared to 5.47pc for a buyer taking out a 60pc mortgage, according to Moneyfacts.

This means a buyer taking out a £200,000 loan with a 95pc mortgage will pay nearly £100 more per month in interest.

Mr Perrins added: “They’re [the Bank of England] penalising the young because the rate of interest on a 95pc mortgage is too high.” Rates on 95pc loans should be the same as for 60pc deals, he said.

First-time buyers are those most likely to take out 95pc loans because of the time it takes to save for a large deposit.

“Most people do not default on their homes. You’re actually stopping people who can afford the mortgage costs from buying a home,” Mr Perrins said.

The Bank of England should also reduce limits on the share of loans mortgage providers can lend above 85pc loan-to-value, he added.

Higher rates on 95pc deals mean that a Labour manifesto promise to extend the mortgage guarantee scheme, which provides government backing for 95pc mortgages, will do little to improve affordability, Mr Perrins said.

A Tory manifesto promise to boost property ownership by reintroducing a form of the Help to Buy equity loan scheme will only drive up prices for first-time buyers, he added.

Under the scheme, first-time buyers would be able to access 20pc government-backed equity loans for eligible new build properties. It would be a less generous version of the previous scheme, which offered loans of 40pc to first-time buyers in London, and closed in March 2023.

“The old version was super inflationary and this one will be inflationary. Unless you can increase supply at the same time substantially,” Mr Perrins said.

The Bank of England declined to comment.

It came as Berkeley said on Wednesday it will launch a build-to-rent platform to develop and rent out 4,000 homes over the next 10 years in a market traditionally dominated by smaller landlords.

Berkeley said new home sales dropped 13pc in the year to May amid a slump in output that is plaguing the construction industry. Pre-tax profits dropped by 7.7pc to £557m, but it raised its profit forecast for the year ahead by 5pc. 

Berkeley’s share price climbed by almost 5pc on Wednesday following its results.

Read the latest updates below.