UPDATE 2-British homes to stay affordable despite rising rates, Barratt CEO says

* HY pre-tax profit rises 0.6% to 432.6 mln pounds

* Targets FY home completions of up to 18,250 homes

* Shares rise as much as 4% in morning trade
(Adds CEO comment, share movement)

By Aby Jose Koilparambil

Feb 9 (Reuters) - British homes will likely remain
affordable and demand will stay strong despite a climate of
rising interest rates, the head of the UK's largest homebuilder
Barratt said on Wednesday.

His comment comes amid signs of a possible lull in a housing
market boom amid potential rises in mortgage rates and a growing
cost-of-living squeeze, although many London-listed homebuilders
have forecast robust demand persisting in the medium term.

Last week, the Bank of England raised interest rates for the
second time in two months, with nearly half of its policymakers
asking for a bigger rise to contain rampant price pressures, a
policy move that could indirectly weaken demand in the housing
market.

But Barratt Chief Executive Officer David Thomas said that
increased levels of household savings during the pandemic had
helped consumers reassess their options, leading to higher
transaction levels, and purchasing power has stayed strong.

"Affordability for the consumer is in a relatively good
place and that is because interest rates have been and continue
to be so low," he told Reuters. "So once we understand that
interest rates are rising - and we saw a base rate increase last
week ... affordability remains more than historic benchmarks,
but we will clearly keep that under review."

Barratt shares gained up to 4% in morning trade after it
forecast building up to 18,250 homes in the 2022 fiscal year,
250 more than its previous outlook, which would also cross
pre-pandemic volume levels.

The homebuilder posted about a 1% rise in half-yearly pretax
profit at 432.6 million pounds ($586.30 million) and also
announced an interim dividend of 11.2 pence a share, up from 7.5
pence a year earlier.

"Barratt continues its impeccable delivery with strong H1
margins, a FY volume guidance raise and the introduction of
progressively lower dividend cover," analysts at Deutsche Bank
said in a note.

The FTSE 100 firm said total forward sales as of Jan. 30
were 4.11 billion pounds, compared with 3.43 billion pounds a
year earlier.

Barratt's smaller rivals, Persimmon and Taylor
Wimpey, last month forecast strong demand to continue,
while midsized players Bellway and Vistry
reported healthy trading on robust demand. Countryside
Properties unexpectedly reported a weak quarter.
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by
Rashmi Aich and Nick Macfie)