Housebuilders unconvinced by government mortgage support

[MongiIG]

Late yesterday, the UK government announced it would extend its Mortgage Guarantee Scheme which encourages lenders to offer 95% loan-to-value mortgages to first-time buyers.

It’s been around since April 2021 and can be used to finance house purchases costing up to 600,000 pounds. It was supposed to stop at the end of this year but will now continue until the end of 2023. It comes as lenders report falling house prices in the face of rising mortgage interest rates and a squeeze on buyers' disposable income.

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[lyngrefrath]

The government should motivate companies to build new houses, and offer favorable conditions for people to buy a house.

[lyngrefrath]

On 10/01/2023 at 01:19, lyngrefrath said:

The government should motivate companies to build new houses, and offer favorable conditions for people to buy a house.

It is impossible for the average person to save for a house, so most people take out mortgages in order to buy a house. I am not from a rich family, so I too took out a mortgage and bought my house. I got the money on good terms because I partnered with Mortgage Advisor Leicester. These guys know all about mortgages, and they helped me get the money at a low interest rate.

[lyngrefrath]

It's interesting to see the UK government extending its Mortgage Guarantee Scheme to encourage lenders to offer more loans to first-time buyers, but it's not surprising to hear that housebuilders aren't convinced by this move.

[ChadGregory]

It's interesting to see the UK government extending the Mortgage Guarantee Scheme, especially given the current challenges in the housing market. With falling house prices and rising mortgage interest rates, it's a mixed bag for both buyers and lenders.

[MongiIG]

8 minutes ago, ChadGregory said:

It's interesting to see the UK government extending the Mortgage Guarantee Scheme, especially given the current challenges in the housing market. With falling house prices and rising mortgage interest rates, it's a mixed bag for both buyers and lenders.

Nationwide says UK house prices up again

House prices recorded a second month of growth, across the UK, in November, according to the Nationwide Building Society.

 Jeremy Naylor | Analyst, London | Publication date: Friday 01 December 2023 12:01

At that earlier point it said that the reason for the rise was that there were fewer and fewer houses coming onto the market and with that restricted supply it was keeping up pricing across the price curve. Despite a monthly gain, prices are down 2% down on an annual basis – but this is still outperforming the expectations of economists in a poll for the Reuters news agency which had forecast a 2.5% decline. This latest report comes just days after Bank of England data showed a leap in mortgage approvals in October.

UK house prices

UK house prices have unexpectedly risen for the second month in a row, according to the Nationwide Building Society. In November, prices increased by 0.2%, following a 0.9% rise in October. This surprising growth can be attributed to a limited supply of homes entering the market, including both new builds and resales. Although prices are still 2% lower than last year, this is better than the anticipated drop of 2.3% that economists predicted. This news comes after the Bank of England reported a surge in mortgage approvals in October. Consequently, major housebuilding companies like Persimmon and Barrett Developments have seen significant increases in their share prices.

The FTSE 350 Household Goods and Home Construction Index

The positive impact on the housebuilding sector is evident in the FTSE 350 Household Goods and Home Construction Index, which includes Persimmon and Barrett Homes among other prominent builders. The index has reached levels not seen since May this year. Barclay, which will release its half-year figures next week, has also experienced substantial gains, reaching its highest price since January 2022. Redrow, another house builder, has also seen similar increases, although it is slightly below its recent peak. Taylor Wimpey, on the other hand, has reached levels not seen since May this year. Overall, the Nationwide Building Society's positive figures have had a beneficial impact on the housebuilding sector, leading to significant gains for various companies.

The Bank of England's data

This unexpected rise in UK house prices has defied economists' predictions, who had expected a decline. The limited supply of housing stock entering the market has contributed to the price growth. Furthermore, the Bank of England's data showing a surge in mortgage approvals during October suggests increased demand for housing. As a result, the housebuilding sector has received a boost, as seen in the significant gains in share prices for companies like Persimmon, Barrett Developments, and Barclay Homes. This positive trend has spread to other builders, including Redrow and Taylor Wimpey, which have reached levels not seen in several months. Although prices are still down compared to the previous year, the smaller decline compared to economists' predictions is seen as a positive outcome

 

 

 

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[ChadGregory]

On 01/12/2023 at 17:34, ChadGregory said:

It's interesting to see the UK government extending the Mortgage Guarantee Scheme, especially given the current challenges in the housing market. With falling house prices and rising mortgage interest rates, it's a mixed bag for both buyers and lenders.

 

If you ever need advice or assistance in navigating the complexities of the mortgage market, I usually consult with Mortgage Broker Chelmsford for all my financial matters. They've been a great resource for me, and I highly recommend reaching out to experts like them for guidance.Let's hope the extension of the scheme provides some relief to first-time buyers and helps stimulate the housing market.