New-build mortgage demand is down – let’s remind the builders what we do best – Pierson

Falling mortgage rates mean, for many tenants, their monthly mortgage payment is lower than their rent. Income stretches of up to seven times a borrower’s salary are boosting buying power and lower deposit requirements for foreign nationals are making new builds more accessible.

We’ve got more 90%-plus loan-to-value (LTV) deals than the market has seen for 17 years and private shared equity schemes are gaining traction – with TSB and Barclays having just launched to market with Barrett Redrow and Persimmon. Add to that schemes like First Homes, the growing availability of joint borrower sole proprietor (JBSP) options and Gen H’s part and part deal available up to 95% LTV, and buyers have multiple routes into the new-build market.

So, naturally, you’d think, given the vast improvement in the availability of funds to buy a new build, buyers would be breaking down brokers’ doors to get their hands on one of these new innovative deals.

You thought wrong.

With August in the rear-view mirror, buyers who’ve been thinking about moving typically spring into action in September so that they can be in their new home before Christmas.

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But the back-to-school bounce has fallen flat and enquiry levels are much lower than we’ve seen in previous years.

Lenders are reporting a dip in new-build applications and we’ve seen an increase in bulk sales from developers and instances of lower offers being accepted, particularly on completed units.

So it seems that while we have all this good news around mortgage availability, it’s being drowned out by the bad – speculation around the later-than-usual Budget on 26 November.

White noise around mansion taxes, National Insurance on rental income and changes to stamp duty are creating uncertainty. And if there’s one thing the market hates, it’s uncertainty.

Buyers are adopting a wait-and-see attitude, unaware that their chances of being approved for mortgage finance are better than they have been in years.

So what do we do? Adopt the same attitude and wait for Rachel Reeves to deliver her Budget and hope that the phone starts ringing?

Absolutely not. I’m not one to sit around until the end of November plumping cushions, waiting to see what happens to the market. In fact, no one in this industry is. That’s just not the way that brokers, lenders and builders operate.

Instead, we must press on and get the good news out there.

Crucial that builders and brokers work together

We’ll be contacting our book of borrowers who weren’t able to get the finance they needed three or six months ago and telling them how much the market’s changed.

Deposit-strapped borrowers may be eligible for a 100% deal, and while these deals aren’t right for everyone, it’s a conversation starter. From there, we can investigate other ways of getting together the deposit they need, or discuss with developers if they are able to offer financial support that they previously weren’t.

In a tough market like this, it’s crucial that builders and brokers work together.

Yes, we need builders to be recommending our services – referring prospective buyers to us at the earliest opportunity. This will give them greater control over the sale and boost its chances of success.

But we also need to remind them of the value that we can offer.

Brokers, at the end of the day, are experts at finding solutions, and that’s exactly what builders need right now.

Even putting away two cases per month for a developer that ordinarily would have fallen by the wayside will highlight the valuable service brokers offer and encourage them to use you on new sites.

The market may be quieter than we would like it to be for this time of the year, but it’s also an opportunity for us to show developers how we can make those sales.

The big developers may have their closed panels of brokers, but the local ones could well be interested in forging new relationships.

So let’s open those lines of communication and get that message out there.

Builders have units to sell and lenders have cash to lend.

It’s a great time to buy, so let’s spread the word.