Challenging markets: Increasing demand and lack of supply

19 March 2019

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In this three part series of challenging markets, we look at how the changing markets are causing new challenges for brokers. We'll focus on increasing demand and lack of supply with new builds, the impact on remortgages and growth in contractor employment.

In this first edition, we'll cover how new builds and Help to Buy: Equity Loan mortgages can be a challenging market for brokers.

There was a 12% increase in new houses being built from 2017 to 2018 to meet demand*. An increasing population, higher rates of divorce and a slowing rental market are all contributing to this demand for new homes to be built quickly.

However, these types of mortgages need extra support and different requirements to standard mortgages.

Developers are under pressure to deliver on short turnaround times. They want quick customer and lender decisions, so they can complete as soon as possible to meet their operational targets. New build brokers are faced with a limited number of lenders who specialise in these mortgages, meaning they tend to choose the same lender who will accept the case and complete the application quickly. This gives brokers little choice when it comes to finding a mortgage that best meets their customers’ needs. As well as being flexible to meet developers’ requirements such as extending mortgage offers and day one valuations.

However, one of the positives to take away from these challenges is that there’s been a recent increase in new build purchases using the Help to Buy: Equity Loan scheme. This has given developers the opportunity to sell more profitably and accelerate building plans. Quarter one of 2018 had the strongest first quarter to date, with completions up 24% on quarter one in 2017**.

*House building release

**5 Years of Help to Buy: Equity Loan

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