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Supporting the new build market – Nationwide

by: James Chidgey
  • 29/09/2014
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Supporting the new build market – Nationwide
As Nationwide returns to offer new-build Help to Buy mortgages to home movers, James Chidgey, senior manager of new build at the mutual, looks at the outlook for the market.

The new-build mortgage sector has seen a flurry of activity over the past three years, initiated by the government’s need to get Britain building, as it tries to address the cries of a housing shortage in the UK.

The economic benefits that flow from ramping up the residential construction industry, for both employment and ancillary businesses, are amplified further when it also leads to more new homes for people to live in.

Nationwide Building Society is at the forefront of supporting new build activity, and was one of the first lenders to support the government’s Help to Buy equity share scheme (known as Help to Buy 1) launched in the spring of 2013, which gives a 20% equity share loan to support a mortgage-linked purchase of a new build home. Since launch, over 35,000 new homes have been completed under the three variations of Help to Buy equity share, in England, Wales and Scotland.

Help to Buy 1 has gone a long way to support its original objectives, which was first and foremost to enable first-time buyers to own a home and take their first step on the home ownership ladder. Some 85% of completed purchases have gone to first-time buyers, with half of all buyers having household incomes of under £40,000.

Take up of Help to Buy has been seen across the country too, and in England, 94% of completions were outside the Greater London region. This scheme moulds in with our mutual heritage at Nationwide, which is to enable borrowers to buy and own their own home, setting them on their lifetime journey as a homeowner.

The support of mortgage lenders for the new build sector, and more significantly, for Help to Buy 1, has not by any means been universal, in fact quite the opposite. Since the scheme launched over a year ago, Nationwide has found itself in a group of just two major lenders who have given their full support to it, and consequently our market share had been more than we would normally like, so lending was restricted to first-time buyers only.

But over the summer, more lenders have begun lending on Help to Buy 1 and therefore the sector has become more competitive, as lenders see an opportunity generated by this hugely successful initiative, so we felt it was right to accept movers once again, as we know some first-time movers might also need that additional help afforded by the 20% equity share loan (interest-free for the first five years in England and Wales).

Such has been the success of Help to Buy for our national and regional house builders, that many developers have been struggling to cope with demand, and have been unable to fully develop their active sites at the rate sales are being made, owing to skills and labour shortage in the construction industry. This is leading to delays with completion dates and therefore instances of borrowers’ offers expiring are becoming more common.

Advisers who have clients seeking a new build property will need to manage their expectations of extended completion dates, advising clients not to do anything in the interim that might adversely affect their credit rating before the completion date.

One thing mortgage advisers can be sure of is that Nationwide will continue to support the new build market, particularly the Help to Buy 1 scheme, which government say will be extended through to 2020 in England, giving confidence to builders and prospective home owners that Nationwide is living up to its mutual heritage and creating the next generation of home owners.

THIS IS AN ADVERTORIAL SUPPLIED BY NATIONWIDE.

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