Craig Hall, Director of New Homes at LSL Financial Services, shares his keen insight on what the New Homes market has in store for mortgage brokers in 2024. While the coming year seems set for just as much turbulence as the last, you can better prepare for your customer’s requests and queries by taking the time to explore what the experts think. In this article, Craig shares his expectations for the New Build market and his areas of key focus, which will go a long way in helping you and your broker firms better prepare and strategise for the future.
Expectations for the new build market in 2024
Several leading industry commentators had forecast a ‘fairly flat year’ for 2024, however I am slightly more optimistic given things have stabilised (for now) and customers are beginning to readjust their expectations regarding mortgage rates, monthly payments, along with considering their priorities, resulting in increased activity since the start of the year.
Key focus areas for 2024
House prices
House prices did not significantly drop during 2023. On the contrary, e.surv Chartered Surveyors have actually reported the largest rise in prices in the last 17 months, by £3,000 (+0.8%) in February 2024. Click here to read the full report.
Inflation rate
Since the Autumn period of 2023, we have seen the rate of inflation fall to 3.4% (20th March), which is the lowest rate for nearly 2.5 years and the Office of Budget Responsibility (OBR) are forecasting inflation to decline further to 2% in Q2 2024 and is then expected to remain below 2% until Q3 2027.
The view from the lending community believes there will be 2-3 Base Rate changes before year-end, with the first change widely expected to take effect in May or June.
Swap rates
Swap rates have remained relatively unchanged over the last month or so, with all eyes on the all-important inflation data – one to continue to monitor closely.
Own New Rate Reducer
The recent launch of the Own New ‘rate reducer’ proposition, in conjunction with Lloyds Banking Group (Halifax), Virgin Money and Furness Building Society, with Perenna Bank and Gen H to follow is certainly something worth keeping an eye on for new homes specialists. This is an exciting bit of innovation that the market will benefit from, which is certain to drive enquiry levels and sales alike! For further information, please click here to learn how the Own New Rate Reducer product can help your prospective buyers to get on the property ladder sooner.
Lender innovation
Keep an eye on lender innovation as a means of easing the barriers to entry for borrowers. Enhanced affordability on more energy-efficient new build properties should be a real area of interest amongst new homes specialists. Accord Mortgages has even recently announced their improved affordability which potentially provides an uplift of £13,000 additional mortgage borrowing.
Private Shared Equity schemes
We may see major housebuilders return to the market with their own private Shared Equity schemes (via a joint venture / partnership), and lender support will be key to the success.
Shared Ownership
The rise of Shared Ownership via housebuilders and private providers, and increased lender support will surely have an impact on the new homes market in the coming months. Principality for Intermediaries have recently launched their Shared Ownership range across both England and Wales, adding new product opportunities to explore.
Higher LTV’s
Lender confidence with new builds is certainly growing, confirmed by the recent moves by Santander (moving to 95% on both new build houses and flats) and Principality (95% on new build houses and 90% on flats). While we can’t make any outright predictions for upcoming moves from lenders, the fact that we are already seeing positive activity leaves us very optimistic.
First Homes Scheme
Will we see a national roll out / expansion of the Government’s First Homes scheme?
Future Homes Standards
The Government is committed to improving the energy efficiency and reducing the carbon emissions of new homes and non-domestic buildings. In spirit of this, the Future Homes Standards (FHS) consultation has been extended until 27 March while the industry awaits the output and implementation requirements and what this could mean to all stakeholders, housebuilders, supply chain, lenders, surveyors and the end consumer!
Spring budget
The Spring Budget which occurred on 6 March – like last year’s Autumn Statement, unfortunately there was very little stimulus for the new build and / or broader housing market. The Chancellor is perhaps mindful at this moment in time of causing further inflationary pressures, but there’s always scope for updates in the coming announcements.
General election
Housing is likely to be a key ‘battle ground’, and again it will be interesting to see what appears in the political party manifestos….
LSL New Homes Forum
Our fifth New Homes Forum will take place on Friday 10 May at Lloyds Banking Group, 125 London Wall, Barbican, London, EC2Y 5BL. Along with industry experts, I will be exploring the outlook for the new homes sector for 2024 and key requirements to support a sustainable new homes mortgage market and the delivery of new homes supply. I would like to express a huge thank you to our hosts Lloyds Banking Group and sponsors Principality for Intermediaries for supporting this strategic event.
Confirmed guest speakers so far include:
- Alex Rose – Director, New Homes, Zoopla
- Neil Jefferson – Managing Director, Home Builders Federation
- Adrian MacDiarmid – Head of Mortgage Lender Relations, Barratt Developments Plc
- Ed McCoy – Group Sales Director, Persimmon Homes
- Derek Whitmarsh – Housing Development Manager, Lloyds Banking Group
- Niki Willacott – New Build Manager, Principality Building Society
- Trudy Woolf – Director of Lender Services, e.surv Chartered Surveyors
- Scott Howitt – Sales Director, Chartwell Mortgages Services Ltd
- Rupi Hunjan – Managing Director, Censeo Financial
If you are interested in attending this invitation-only event or would like further information on the new homes market, please get in touch via email craig.hall@lsl-fs.co.uk.
Many of you will have heard me say before “there is never a dull moment in the new homes sector”, and the above highlights just that, reinforcing the value of independent mortgage advice with helping customers make sense of the broader economic position and what this means to their mortgage and housing decision making.
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