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Builders Ask Lenders To Ease Criteria For New Homes

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http://business.timesonline.co.uk/tol/busi...icle6539178.ece

Homebuilders have called on banks and building societies to ease criteria on mortgages for new-build properties.

John Stewart, the director of economic affairs at the Home Builders’ Federation, said: “Mortgage availability is the key issue for the housing market and we need to see lenders return to some sensible levels of lending to assist recovery.â€

He added: “Lenders — and the Government, with the influence it now has in the banking sector — need to especially understand the importance of the new-build market to the wider economy and for jobs, and their lending criteria need to reflect this.â€

Lenders have become increasingly nervous about offering home loans for new-build flats and houses because of fears that prices have been overpriced in the past and could continue to fall steeply

West Bromwich Building Society is the most cautious, refusing to provide loans worth more than 50 per cent of the market value on new-build flats and 75 per cent on new-build houses. Most other lenders, including Halifax, Britain’s biggest lender, Nationwide, Abbey and Alliance & Leicester impose strict criteria on new-build mortgages.

Coventry Building Society is one of a handful of lenders that recently changed criteria so that a property would be considered new-build if it was constructed in the past three years. Most lenders regard new builds as anything built in the past 12 months.

Homebuilders also have expressed frustration at the insistence of lenders on valuing new-build homes as if the properties were on the second-hand market. The result is often a lower valuation than hoped for, reducing the size of mortgage that a buyer can acquire.

Peter Williams, of the Intermediary Mortgage Lenders Association, said: “Building firms are facing cashflow problems, so it is critical that these firms can sell homes quickly. But how can you encourage builders to produce more homes if there remains a critical problem with mortgage finance?â€

New-build city centre flats have been hit hardest by the crash in property values over the past two years, with prices falling by up to 60 per cent. The average value of new-build homes fell 2.3 per cent last month, according to SmartNewHomes.com, a property website that advertises 90 per cent of new-build properties on the market.

David Bexon, managing director of the website, said: “While many of the UK house price indices are now starting to show monthly rises, it is likely to be a little while before we return to sustained price growth across the board. I do believe that the bottom is now being reached in the new-homes market, and that the monthly volatility in average prices we are now witnessing is indicative of this correction.â€

60% off some city centre flats. What no buyers?

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Maybe the builders could reduce their profits on a new development by selling them at a more realistic valuation helping reduce the banks risk to higher ltv? Just a thought.

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West Bromwich Building Society is the most cautious, refusing to provide loans worth more than 50 per cent of the market value on new-build flats and 75 per cent on new-build houses.

Makes perfect sense to me? In fact a bit generous on new-build houses?

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West Bromwich Building Society is the most cautious, refusing to provide loans worth more than 50 per cent of the market value on new-build flats and 75 per cent on new-build houses.

Makes perfect sense to me? In fact a bit generous on new-build houses?

They are moving back to past times. Back in the 1980's I recall that many people simply didn't bother even asking one local building society for a loan as they never lent more than 80% of the property value - regardless of status.

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Maybe the builders could reduce their profits on a new development by selling them at a more realistic valuation helping reduce the banks risk to higher ltv? Just a thought.

If builders could easily build and sell houses at a lower price, we would never have a housing bubble.

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:blink: What utter drivel.

Q: When the bank needs to repossess and sell the place what will it be?

A: Second hand.

So that is the only value a bank is interested in.

All this tosh about a "new-build premium" is just marketing drivel, designed during a false "time of plenty" to skim the maximum off the young and gullible. Personally I wouldn't touch a new build with a barge pole for a list of obvious reasons.

Yep, that's pretty much as it is. Basically the builders are saying, dear banks, please let us carry on ripping off the foolish by selling overvalued and over mortgaged properties.

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...the builders wish to return to the land of make believe....you cannot fight the raw force of nature ..i.e. basic economics...these spivs may continue to utter...but should be ignored.... <_<

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Given the build quality and size of some of these new builds I don't think they will age well at all, you would have thought the council planning departments would have learnt from the 60's high rises that turned out to be an absolute disaster.

Considering this I think the banks are being very optimistic about these properties especially when they lend a mortgage that is for 25 years.

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Same old problem waiting to happen. We have heard this all before.....banks need to relax lending to create yet another boom and I hate to say this but it will probably happen.

The British economy is screwed...we rely on debt to drive growth and the results of a credit crunch are all so obvious. Our lovely government want to keep us in debt to keep our very worn economy growing and when it fails again the tax payer will pay once again.

This is capitalism.....the modern way. The problem is that every time it happens the Great British people lose even more essential services such as the right to a pension or a FREE NHS. We can't keep bailing out this system without losing something. But the government will blame a everything else for the cuts apart from the reality that we have just bailed out ourselves or in reality paid for capitilism......

The UK need to face reality....we can't afford to live like celebrities and we must live within our means. This means houses that cost no more than 3 times your income.

A huge mortgage makes a person a slave to debt and unless that property gains in value then you might as well have rented. A huge mortgage may never be repaid if you are only meeting the required repayments...you need to be overpaying and if you can't then your at risk of repossession.

We have a combined income of over 60,000 pa and our mortgage is now only 80,000 and to be honest I would,t consider borrowing more. If one of us loses our job then that 80,000 becomes a huge responsibilty......can you imagine if I had a mortgage of 150,000 or even more.

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