More options needed to support growing new-build interest ‒ analysis

More options needed to support growing new-build interest ‒ analysis

Prospects for new-build buyers appear to be improving, with both Halifax and Virgin Money announcing partnerships with Own New, aimed at helping purchasers with only a five per cent deposit.

They follow the likes of Gen H, Perenna and Furness Building Society in teaming up with Own New.

Brokers told Mortgage Solutions that further options to support new-build buyers were welcome, given the conclusion of the Help to Buy scheme, with many suggesting that interest in newly built homes is actually increasing currently.


Alternative options welcome

Matthew Williams, consultant at London Money, welcomed the “alternative approach” offered by Own New, though it remained to be seen how many lenders would sign up and how it would be implemented with developers, lenders and brokers.

Williams suggested the appetite for new build has picked up this year. He noted that buyers had been “sitting on the fence, waiting to see what was happening with rates and prices” and now felt the situation was more inviting.

He noted that affordability remains an area ripe for innovation, adding: “Affordable houses is the more direct approach, and one that would carry more weight, however, that’s always been in the budget and has always undelivered.”


Appetite growing for new builds

Mark Robinson, managing director of Albion Forest Mortgages, said his firm had seen an increase in enquiries from clients interested in purchasing new build properties recently.

However, he warned that the properties tend to be overvalued, with “a significant number of down valuations” taking place.

Akhil Mair, director of Our Mortgage Broker, was another intermediary to report “growing interest” in new builds at the moment, noting this was helped by greater availability of suitable mortgage deals.

“Lenders offering incentives like contributions towards deposits and stamp duty stand out,” he continued.


Supporting buyers

Justin Moy, managing director of EHF Mortgages, praised lenders for their approach to supporting borrowers with modest deposits, noting that the likes of Barclays and Santander were offering deals for those with only small sums saved.

He continued: “This improved support will inevitably make it more attractive to buy new, but buyers need to be aware that new build prices are normally higher and you may have some negative equity in the early years of ownership.”

The idea of buying a property that nobody else has lived in, and has little need of immediate renovation, is always appealing to buyers, particularly first-timers, argued Robert Timm, managing director of Sunland Mortgages.

He continued: “I think lenders have recently been improving criteria to assist new-build buyers, including reducing loan to values (LTVs) on new-build flats, making them more accessible.”

Williams said that buyers enjoy plenty of mortgage choice at the moment, with a handful happy to lend up to 95 per cent on new-build houses, though the majority limit themselves at 85 per cent.

He added: “It’s always worth checking with the developer about overexposure limits – I’ve known Santander in the past to be exposed on several sites. Personally, I find Halifax always source well on new-build products and are great for foreign nationals. Few lenders have these great criteria.”

Mair suggested there was plenty of room for innovation, for example, in the provision of flexible criteria for self-employed borrowers and those with adverse credit.

He added: “As for further innovation, providing upfront low-cost solutions with options for interest-only payments and developer contributions could greatly benefit new-build clients.”


Is it worth the premium?

Michelle Lawson, director of Lawson Financial, argued that buyers are increasingly becoming wise to the fact that they will have to pay a premium for new-build properties.

She continued: “Most buyers have issues post completion with the properties that need addressing. Sites tend to chase the massive profits by building executive homes rather than providing a good mix of all including a generous proportion, rather than a token gesture, of flats and smaller houses for starter homes. 

“In my opinion, the developers need to change tack and review what the market or area wants rather than the shareholders.”


Goodbye Help to Buy

Demand for new builds has been “pretty consistent”, suggested Stephen Perkins, managing director of Yellow Brick Mortgages.

However, he noted that with Help to Buy now a thing of the past, “whilst demand is strong, the ability for potential buyers to afford and obtain the new-build properties has reduced.”

Timm pointed out that a big drawback for the new-build sector has been the removal of the Help to Buy scheme, with nothing established to replace it.

“That was a hugely important scheme that helped thousands onto the ladder into a new-build home, and nothing since has come close to having as much of a positive impact for buyers.”


Look again at shared ownership

Gary Bush, financial adviser at, called on the government to focus on existing schemes aimed at supporting buyers, rather than coming up with new initiatives for the new-build market.

He said “The government would be better-placed at taking another look at their existing shared ownership arrangements and removing a lot of housing association draconian conditions rather than further new-build meddling.”

Two thirds of first-time buyers team up to get on the ladder

Two thirds of first-time buyers team up to get on the ladder

The bank’s latest House Price Index shows that joint first-time buyers (two or more people) now account for 63 per cent of mortgage completions, while first-time buyers made up more than half of all home loans.

High house prices also mean that people are typically 32 when they buy their first property, and there has been an increase in people buying flats rather than houses.

Analysts noted that it’s unsurprising that the majority of first-time buyer applications are joint, given the increase in deposits over the past decade.

First-time buyers put an average deposit of £53,414 down last year, £21,000 more than 10 years ago (+67 per cent).

Although the average salary is higher than it was a decade ago (up 30 per cent to £43,257) getting together a deposit large enough to put down on a first home means raising more than a year’s average pay.

First-time buyer numbers falling

Those buying a property for the first time continued to be the majority of all home loans last year. However, the overall number fell by 21 per cent to 293,339 last year, compared to 2022.

The average house price paid by those buying their first home in 2023 was £288,136, five per cent lower than the previous year. Despite this, house prices for first-time buyers remain more than £132,000 more expensive, on average, than 10 years ago, or up 86 per cent.

Halifax said that “flats have increased in popularity as a starter home” compared to a decade ago, increasing by six percentage points, suggesting that flats may be a more accessible property type for new buyers and a lower relative price point.

The number of first-time buyers choosing a terraced home has dropped by seven percentage points compared to 10 years ago.

Kim Kinnaird, director at Halifax Mortgages, said: “Following a record year in 2021, unsurprisingly in view of the wider economic environment, the number of first-time buyers joining the property market fell again in 2023 to around 293,000. Despite this drop, new buyers made up over half of all home loans. However, to get a foot on the ladder most people are now buying for the first time in joint names.

“There are a number of schemes available to support first-time buyers, like the mortgage guarantee scheme, which allows us to offer up to 95 per cent mortgages to first-time buyers and has been extended until June 2025. Alternatively, the First Homes scheme offers discounts on new-build homes to first-time buyers, while shared ownership options allow new buyers to purchase some of the property and rent the rest.

“The overall fall in house prices we saw in 2023 will go some way to helping people get on the ladder for the first time – but these buyers are still dependent on a steady supply of properties in their price range, while they are faced with the continued pressure of saving for a deposit, when rent and living costs are high.”

The year ahead for first-time buyers – Bamford

The year ahead for first-time buyers – Bamford

For first-time buyers, there has been the recent promise of some ‘big ticket’ incentives from the government in March’s Budget, with the rumour mill looking at action on stamp duty – potentially being abolished, though this seems unlikely – plus something to fill the hole left by Help to Buy ending.

On that point,  the government would be better positioned to support industry solutions in this area, such as Deposit Unlock, which recently added another lender, Bluestone Mortgages, to its ranks and should be the go-to Scheme with no need for any further taxpayer money in this area.

If the government does decide to look at stamp duty cuts/threshold changes again then this is only likely to be a major incentive in high-price areas given first-time buyers don’t currently pay any stamp duty below £425k anyway.

Of course, if it does decide to go ‘nuclear’ on stamp duty then this is likely to act as a major incentive within the wider housing market, and we could see increased purchase demand and more people willing to look at both their purchase/sale options.


Can first-time buyers turn a corner in 2024?

There’s no doubting purchase activity amongst home movers has fallen back, and first-time buyers have been the predominant buyers over the last two years. Indeed, UK Finance statistics show home movers haven’t outnumbered first-time buyers in terms of mortgage advances since Q2 2021, and in every quarter of 2022 and 2023 up to Q3, it is first-time buyers who have been the dominant buying demographic.

This despite it being incredibly challenging times for first-timers particularly in terms of access to housing supply, but also clearly in terms of meeting affordability levels in a higher interest rate environment.

One wonders if 2024 will see something of a corner turned in terms of interest rate levels, given we have seen no changes to base rate in recent months, and swaps have dropped fairly substantially as well, in expectation of BBR being cut during the year ahead.

As I write swaps are now tracking well below a year ago, and there is an anticipation throughout the market that we will see a continuation of the product rate cuts which were so prevalent towards the end of the year.

Whether that fully translates to the high LTV product space remains to be seen as, up until now, the biggest rate cuts have (unsurprisingly) been at the lower LTV levels. However, with predictions of still fairly subdued lending levels again in 2024, it would not be surprising to see lenders looking to start the year on the ‘B’ of the ‘BANG’ in order to get ahead of the curve and to fill pipelines as quickly as possible.

In the high LTV product space, we did see a growing number of product options in the last quarter of 2023 and rates did come down. Coupled with lower house prices, falling interest rates will give first-timers a much more positive environment within which to purchase, and a much greater chance of getting on the ladder providing they have the supply to choose from.

One final note on 2024 and it, of course, comes in the form of the anticipated General Election – will it be May or November? It can’t be next January, surely? Certainly an early Budget points the way towards an earlier GE, and there’s no doubting housing policy will figure heavily within the manifestos of all parties, but particularly the Conservatives and Labour.

The former will feel they need to make a big pitch to younger voters who may feel completely ostracised in terms of their ongoing ability to get on the ladder currently, while Labour have already pledged to build 1.5 million affordable homes in the next Parliament should they win.

The quest for the hearts and minds of would be first-time buyers will figure significantly in an election campaign, and it will be interesting to see how these land with a generation who have definitely not had the advantages of their parents or grandparents when it comes to buying a first home.

Equity release market has ‘glimmer of light’ ‒ Star Letter 15/12/2023

Equity release market has ‘glimmer of light’ ‒ Star Letter 15/12/2023

This week’s comment is in response to: Less than a quarter of brokers say 2023 was ‘good’ for business

Andy Wilson said: “If the mortgage world seemed bad in 2023, consider the equity release world. A combination of high lifetime mortgage interest rates and significantly reduced loan to values (LTV) following the disastrous mini Budget of September 2022 meant that for many advisers, business immediately fell off a cliff and never really recovered.

“Many have seen their business levels reduced by more than half compared to 2022. To borrow a phrase from the investment and pensions world, for advisers ‘the value of your investment can fall as well as plummet’ seems appropriate.”

He continued: “However, as we end a year, most equity release advisers would prefer to forget about, there has been a glimmer of light at the end of the tunnel which, for once, may not be a train coming the other way.

“Gilt rates have fallen in recent weeks, meaning some lifetime mortgage interest rates have also reduced, and some LTVs have increased. This is enough to at least re-start the conversations with those clients who may have been holding off until the market improved.”

Wilson added: “In a confident move forward, I have invested in a number of horseshoes and rabbits’ feet, and I am actively involved in scouring my garden for four-leafed clovers in the hope that this trend will continue into 2024.”


First-time buyers want to be educated and understand the process

This week’s second comment came from the article: ‘I get 99 per cent of my leads from Instagram’ – mortgage adviser

disqus_8fOMMy2pIO said: “Younger people buy everything online. They don’t ask their friends or family. They see someone share information, buy into it and go to them,” she said.

“Really? Says someone with 30+ years in the business who has just done two FTB loans from referrals related to existing clients. They want to be educated and understand the process, have faith and trust in that person acting on their behalf. The problem with buying online is you cannot touch and handle the goods.”


The comments here are from our readers and do not necessarily reflect the views of Mortgage Solutions and Specialist Lending Solutions.

Bluestone Mortgages commits to Deposit Unlock

Bluestone Mortgages commits to Deposit Unlock

The Deposit Unlock scheme, which was launched in  2021, allows customers to buy a new build home from a participating home builder with a five per cent deposit, using a mortgage from a participating lender.

Teaming up with Gallagher Re and the Home Builders Federation (HBF) the firm will be the first complex credit lender to offer 95 per loan to value (LTV) new build mortgages.

This will open up the scheme to first-time buyers who cannot secure finance through mainstream lenders.

Other lenders include Accord Mortgages, Nationwide Building Society and Newcastle Building Society.

The lender will launch a product early next year and it will aim to support “disenfranchised first-time buyers currently unable to get onto the property ladder following the withdrawal of Help-to-Buy”.


‘Bluestone Mortgages is a fantastic new addition to the Deposit Unlock scheme’

Reece Beddall (pictured), sales and marketing director, Bluestone Mortgages, said: “Following the end of the Help to Buy scheme, those with smaller deposits are finding it increasingly challenging to get onto the property ladder as the increased cost of living limits their power to save or a deposit.

“With this in mind, we’re focused on innovating to find new solutions to help would-be borrowers with lower deposits achieve their homeownership goals. This partnership demonstrates our commitment to supporting disenfranchised first-time buyers with complex credit, as well as helping housebuilders find customers for their properties.”

Freddie Scarratt, head of UK mortgage at Gallagher Re, added: “Bluestone Mortgages is a fantastic new addition to the Deposit Unlock scheme, as they broaden the potential customer base for the scheme’s house builders.

“Heading into 2024, consumers need more choice, and Deposit Unlock is delivering that with a new lender and a unique product. With over 75 developers now signed up, and with an increasing choice of lenders on board, Deposit Unlock is going from strength to strength, providing a positive impact for all stakeholders. We look forward to welcoming Bluestone Mortgages onboard in the New Year.”

David O’Leary, executive director at HBF, said: “Ensuring people can buy a new build home is key to the industry’s ability to deliver desperately needed new homes. Too many people are unable to realise their ambition of home ownership because they simply can’t afford the deposit required.

“The industry has worked with lenders to develop a sustainable solution that will help more prospective buyers onto the housing ladder, maintain demand and so enable builders to build. The addition of Bluestone will increase the availability and awareness of Deposit Unlock and so help more people realise their ambition of owning a high quality, energy efficient new build home.”

A clean credit score, proof of affordability and broker soft skills key to FTB success – Geddes

A clean credit score, proof of affordability and broker soft skills key to FTB success – Geddes

In the second part of a video series in association with Accord Mortgages, Geddes said: “It’s taking FTBs a lot longer to actually get on the ladder. We’re working with them for maybe 12 to 18 months before they buy their property. So, its staying in contact with them, keeping confidence high in what they’re doing and preparing them because they often need a bigger deposit.”

Geddes added: “It’s changed for every age group. They’re paying more in rent, they’re getting married older, they’re having children and buying houses older. You’re seeing a mix of people having to buy together, so, friends, siblings. These things have really changed, so it’s working with them non-stop just to keep them confident in what they’re doing and when they’re going to do it.”

Due to the smaller deposit, credit scores have to be clean and first-time buyers have to know they’ll need to document all additional ancillary income, including commissions or bonuses, said Geddes.

“We need proof of it to be able to utilize affordability,” she said.

Richard Merrett, director of strategy for Simplybiz said technology adoption was helping brokers explore wider affordability options and said lenders like Accord who adopted a common sense approach to lending often applied a little more flexibility to policy and have become more popular with the intermediary market.

He added: “A lot of brokers have started to challenge customers more. So if you were a first-time buyer, buying a home, asking do you need that large PCP car loan, for example?”

Jeremy Duncombe, managing director at Accord Mortgages, said research from the lender showed people are concerned house ownership might become an elite privilege as we become a nation of renters over the next five years.

“Rising rents mean that drive to get on the housing ladder means people are making quite different decisions, whether its getting married later or not at all, buying later, or staying at home with parents. But while people are having to make these hard decisions, they are still choosing to go for that mortgage, so there are some really encouraging signs there,” said Duncombe.



See the first video segment on buy to let in this four-part series here.

Note: Since the recording of this video, Richard Merrett will return to Alexander Hall to take on a new role as its managing director in January.

Bank of Mum and Dad gifts £35bn to help kids onto the housing ladder

Bank of Mum and Dad gifts £35bn to help kids onto the housing ladder

The latest Life Well Spent report carried out by SunLife found that six million of the over 50s have given significant funds to family over the past five years.

The study showed that on average £15,978 has been handed over to help cover various costs, including debts or money spent on cars and holidays.

But the key reason for dipping into the Bank of Mum and Dad was to help family members onto the property ladder.

The report revealed that 20 per cent of the over 50s who have gifted funds to family members, which is the equivalent to 1.2 million people, did so to help a loved one pay for a deposit on a home purchase.

In just over nine out of ten cases parents helped their children, while one in 14 gave grandkids the capital to help them purchase a home.


Regional differences

Regional disparities were also uncovered in the SunLife study. Areas where children or grandchildren have been helped along most are the North West, East Anglia and London, where 26 per cent of families helped children onto the ladder.

Those buying in London needed the most financial support, as the average amount given by parents over 50 was just under £84,000.

The first-time buyer deposit in the capital is just shy of £64,000, the financial services firm revealed in the report.

While in the North West and East Anglia the amounts gifted were far less at £39,539 and £19,740 respectively.

Family support ‘a priority

Mark Screeton, the CEO at SunLife said: “Our Life Well Spent report shows that financially supporting family is a priority for many over 50s. And given 27 per cent say that one of their biggest financial worries is how their children and grandchildren are coping financially, is perhaps no surprise that so many want to help out.

“The research shows that over 50s are gifting cash for a range of different reasons, from simply wanting to treat a loved one with an extravagant birthday or Christmas gift, to something more specific, like helping with a house deposit or to buy a car.

“And while financial need is a clear driver for why over 50s are giving so generously, there is another factor at play – happiness – with 81 per cent of those who have gifted cash saying that doing so increased their overall happiness.”

West One opens up buy-to-let range to foreign nationals and FTBs

West One opens up buy-to-let range to foreign nationals and FTBs

The firm will now consider lending to foreign nationals who are non-UK passport holders, living in or outside the UK and without indefinite leave to remain, with rates starting at 6.79 per cent.

The lender’s mortgages are also available to first-time buyers who don’t currently own a residential or buy-to-let property, with rates beginning at 6.09 per cent.

West One will consider lending on:

The lender will also lend to borrowers with no mortgage history, up to 75 per cent LTV.

This includes expats and foreign nationals, both up to 65 per cent LTV, although they must have a UK credit footprint and have owned a UK property for a minimum of 12 months.

Andrew Ferguson (pictured), managing director of buy-to-let at West One Loans, said: “We pride ourselves on having one of the most diverse and accommodating set of criteria in the market. But that doesn’t mean we aren’t constantly looking for areas to improve.

“Through regular discussions with brokers, we know there is significant demand for foreign national, first-time buyer, ex-local authority, investor-led and sub-let solutions – and so we have acted.

“We want brokers to know that if they have a case that’s out of the norm, we are always willing to have a discussion to see if we can make the deal work where overall credit quality is good.”

Seven out of ten first-time buyers confident of getting on the property ladder – HSBC

Seven out of ten first-time buyers confident of getting on the property ladder – HSBC

Research from HSBC revealed that nearly seven out of ten people who are hoping to buy their first home in the next 12 months are now more certain of achieving that goal, compared to findings at the start of the year.

The reasons behind the buying decision were varied, with just over a fifth of first-time buyers saying that it is cheaper than renting.

Gaining more independence was the next most popular reason to buy with 20 per cent saying this was their primary motivation.

Financial security (17 per cent) and providing for their family (14 per cent) were the next two most popular reasons to purcahase their own home.

One in nine said the main reason using their first home as an investment.


Regional differences

The level of confidence varied by region.  First-times buyers in Wales (64 per cent) and Yorkshire and Humberside (63 per cent) were most confident of being able to afford a new home.

The levels dropped to 53 per cent in the North East and Northern Ireland and 52 per cent in the East Midlands


Finding a mortgage provider

Using an adviser was the most popular way to receive information about the mortgage market, with 41 per cent taking the broker route. Just under a third (30 per cent) went directly to a mortgage provider website, while 28 per cent used comparison sites.

When it came to picking the lender of choice, cost was the number one driver (32 per cent). Next came a recommendation from a broker or adviser (31 per cent), while 26 per cent opted for a brand that had gained their trust.

Just over a fifth said that chose a lender because it was their existing bank or building society.

A recommendation from family or friend was the least most popular reason for choosing a provider with just 11 per cent taking this option.


‘Shift in attitude is reassuring’

Andrew Matson,  the head of mortgages at HSBC UK said: “It’s encouraging to see more optimism amongst first-time buyers.

“The first half of this year has been challenging, but the shift in attitudes is reassuring and highlights the resilience of the housing market.

“While we don’t have a crystal ball to see what the future holds, it is pleasing to see the positive sentiment running throughout our research and we will continue to lean in to help support our customers.”

Huge surge in 35-year mortgage terms among under 30s

Huge surge in 35-year mortgage terms among under 30s

A quarter of homeowners under 30 have a repayment term on their mortgage of 35 years or more, according to Experian.

The credit reference agency said that this is up from just one in 10 in 2020 – a staggering increase of 150 per cent.

It means many under 30s will be approaching retirement before they’re able to pay their mortgage back.

Affordability benefits

A longer mortgage term is appealing due to lower monthly repayments, which can help borrowers jump over affordability hurdles.

Experian said that, according to partner, L&C Mortgages, the average two-year fixed rate deal now stands at 5.99 per cent, whilst a standard variable is 8.22 per cent.

But, of course, while a longer term can enable buyers to get onto the ladder, they will pay back more overall.

This could mean having to potentially pay their mortgage for their entire working life, or beyond.

James Jones, head of consumer affairs at Experian, said: “Our data suggests that people under 30 are looking to secure longer mortgage repayment terms to help keep monthly repayments down on their homes, and this could also be affecting property buying among house hunters.

“With high interest rates increasing the pressure on borrowers, young people may feel like they have been locked in, so we’re encouraging people to consider ways that they might be able to secure better deals on their mortgage terms.

“We’d suggest engaging with your credit score and considering whether it can be improved, even if you’re not yet looking to move.”