New-build lenders are growing but there’s still room to improve – Marketwatch

New-build lenders are growing but there’s still room to improve – Marketwatch

This week Mortgage Solutions asked our experts if they feel new build is being supported well enough by lenders?

Matt Wilde, sales director of the new homes team at SPF Private Clients, says although new lenders have entered there is still disparity between criteria for flats and houses.

David Hollingworth, associate director communications at London and Country Mortgages, notes that lenders understanding key criteria differences for new-build mortgages is vital.

Paul Bumford, managing director of Andrews Mortgage Services, adds that lender support is good but the government needs to step up.


Matt-Wilde-SPF-colourMatt Wilde, sales director of the new homes team at SPF Private Clients

There has been a marked increase in the number of lenders with positive attitudes towards lending on new-build properties. Subsequently, there is more competition unlike a few years ago when Nationwide and Halifax dominated this mortgage market.

Over the past 12 months lenders such as Virgin Money, Barclays and Santander have all created new-build desks with dedicated underwriters. They recognise the increased business they can attract and the need for a quicker and smoother transaction for these mortgages.

While there have been improvements to criteria, such as more lenders able to issue longer mortgage offer terms for new builds, there is still disparity between some of them on the level of deposit required on flats compared to houses.

For example, on a residential basis the majority of lenders require a deposit of between 20-25% on a flat compared with 10-15% on houses.

And when it comes to investment mortgages there is still some reluctance to lend, especially for new-build flats, with some lenders choosing not to lend on them at all.

The Help to Buy scheme, which is solely for new-build properties, has been very well supported with most of the high street lenders now offering products for these buyers.


2377495-david-hollingworthDavid Hollingworth, associate director communications at London and Country Mortgages

If there was any common thread at all in the manifestos of the main parties in the General Election it was that more new homes needed to be built.

So the need for more new homes to ensure that there will be improved access to affordable home ownership seems to be a consensus view.

As a result, the new-build sector will have an extremely important part to play in the market.

Lenders are increasingly recognising that they need to develop their new-build proposition to be able to compete with those that are already well established.

The likes of Skipton and Leeds building societies have both shown the right approach in understanding the service and criteria requirements, such as extended offer times, to develop a successful new-build proposition.

Of course, they are far from alone and big names like Santander have put a good deal of energy into service, both generally and for new build.

Looking ahead I can only see more lenders fine tuning their offering which is great news for brokers and buyers, as it can only result in improved choice and enhancements to product and criteria.

No doubt the big guns like Halifax, Nationwide and Barclays will maintain their strong position but there’s still room for others if they can meet the consistency and level of service required.


Paul-Bumford-AndrewsOnlinePaul Bumford, managing director of Andrews Mortgage Services

Yes, as with most new-build schemes available on the market there are generally plenty of lending options available, especially for first-time buyers.

However, many first-time buyers are misinformed about where to go for their first mortgage.

Heading to their own bank may seem a sensible place to start but large numbers of those hoping to get on the housing ladder are left disillusioned by the limited options their bank offers.

There has never been a better time to get access to a mortgage but you need to be in the right place.

Overall the property market is still under-supplied and the question should be, Is the new-build market sufficiently supported by the government?

We know there are plenty of brownfield sites that have been and more to be identified, that building new homes on will be imperative to get the entire market moving again.

Some local areas need to do more to address nimbyism that can be a big barrier for local people to get their first or further step on the ladder in their own communities.

Mortgage access is currently very good but there are just not enough homes to supply the demand. Action is needed through government policy and movement from local authorities to really see a difference for all who are hoping for their next move.