One the surface the return of 95% mortgages on new build homes is good for housebuilders
Housebuilders are quietly very pleased indeed by this week’s announcement on a deal with mortgage lenders, and listed builders are having to choose their words carefully because they think it might actually change analysts’ forecasts.
The deal, which will see the return of 95% mortgages on new build homes (a real boost for builders here, relatively disadvantaging the second hand market) was only enabled after a last minute intervention by the government.
However, there are plenty of ways it could unravel. There are no guarantees that any lending will be in addition, so mortgage lenders could just reduce lending elsewhere. And the Council of Mortgage Lenders says there are no rules - yet - on the rates the lenders will have to set, meaning the 95% mortgages could be made unaffordable in practice.
The potential for builders is huge - but if lenders aren’t enthusiastic they’ll still find ways to frustrate this potential in the real world. But the true test will be the first deals between builders and banks.