Housing secretary James Brokenshire confirmed the government is funding residential housing development across all tenures to the tune of £44bn over the next five years.
This equates to £8.8bn a year, and while that’s a drop in the ocean against gross lending in the mortgage market of £257bn in 2017, it is rather a larger proportion of the £43bn net lending done in the UK last year.
It is in fact a 20% boost to the additional funding coming into the new build market.
Huge growth opportunity
What this goes to illustrate is just how huge a growth opportunity there is for lenders and brokers that develop their expertise in the new build mortgage market.
Despite the success of the government’s scheme over the past five years, new build, shared equity and Help to Buy remain something of a niche area in the mortgage market.
While specialists exist, they are still relatively few and mainstream brokers have, perhaps sensibly, been reluctant to dip just a toe in the new build water.
Lenders have also been slow to adopt the new build market, other than at the specialist end of the spectrum.
The growing noise around the lack of choice for borrowers wishing to staircase their Help to Buy at remortgage is evidence of this.
I am in two minds about this.
On the one hand this market requires specialist knowledge. The rules of the game are different – valuations are trickier, underwriting must be more expert, and mortgage offers need to be extendable.
Having an internal team dedicated to dealing with new build mortgage applications has proven the right approach for us and is also the reason we’ve partnered with 3MC on Help to Buy.
On the other hand, the potential growth in this market suggests that both lenders and brokers will need to step up to the challenge if we are to support the financing and sale of new housing on this scale.
Whether you believe specialising yourself or referring to a partner is the way to go, one thing is clear for me: new build presents the market’s biggest opportunity at the moment and we’d all be foolish to ignore it.