Santander led the charge back into new build in February by upping its LTV for houses and flats to 95%. It seems the bank’s move caused the rest of the pack to consider what they were missing.

In recent weeks, HSBC, Nationwide, NatWest, Leeds Building Society and Atom Bank have all increased loan values for new-build borrowers, with some following Santander up to 95% on houses, but capping at 90% for flats.

So, why the renewed appetite in new build?

 

Positive market conditions

“It’s about time,” said Samantha Highfield, new-build manager and senior adviser at Mortgage Select, based in the South West.

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“While my opinions may be regionalised, having worked in the new-build space for almost 10 years, I can safely say that property valuations have held well over this time,” she said.

An increase in sales incentives offered by developers, says Highfield, is making new-build purchases more attractive than second-hand homes.

“Who wouldn’t want a 5% deposit contribution or their stamp duty and legal fees paid?” she added.

The price paid for a new-build home was £398,520 in June, up 17% year-on-year and 4% on the following month, according to Land Registry data. Re-sold properties managed a slight price lift of 0.4% annually and monthly to £276,898.

Meanwhile, this year’s quarterly build statistics painted a picture of growth.

Quarter-on-quarter, the number of new homes registered to be built and completion volumes are tracking positively, up 34% and 29% respectively, according to the National House-Building Council’s (NHBC’s) July figures.

They remain down on 2023 activity, however.

Helen Pierson, director of MAB network partner, said: “Despite a backdrop of a challenging economic environment, new build is holding up well.”

 

Competition hots up

But it’s not just favourable H1 conditions enticing the biggest lending names to loosen their criteria.

“There’s a drive to capture market share,” said Pierson. “Santander, for example, has slipped down the league tables in terms of lending volumes.”

Difficulties competing on rate is another factor encouraging lenders to re-examine their criteria, says Highfield.

She continued: “Pre-mini budget, lenders could aggressively compete on rate. We would forever be seeing the big six lenders dancing over the top spot on the sourcing system.

“However, this could only last so long. With pricing becoming so volatile, lenders needed to find a new way to compete, and this is now with their criteria, and we certainly aren’t complaining.”

 

Popularity of shared ownership rises

Although there’s more choice for borrowers with a 5% deposit, affording the accompanying mortgage is still a challenge, says Pierson.

Last year, 164,000 first-time buyers had family assistance in buying their first home, according to Savills, accounting for 57% of all mortgaged first-time buyers.

While the number of assisted buyers is down from a peak of 198,000 in 2021, this is the highest proportion of first-time buyers receiving help since 2012, and is 10% up on 2022.

For those who don’t have parental support, affordable homeownership schemes are an option, says Pierson.

“Shared ownership is increasing in popularity due to the lower deposits and mortgage affordability required, but more needs to be done to increase supply, particularly in respect of affordable homes,” she said.