12 February 2024 , 09:38
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Housebuilder Bellway has reported "encouraging" signs of buyers returning to the market following a drop in mortgage rates.
After a tough six-month period where housing revenue fell by around 30% to £1.25 billion, people are starting to buy again. In January this year, approximately 0.59 homes were bought at every Bellway site each week, compared to just 0.45 homes in the same month last year.
"Affordability steadily improved throughout the period, driven by wage increases, the easing of consumer price inflation and a gradual reduction in mortgage interest rates," said Bellway.
The company added that good availability of mortgage products has helped to boost customer demand since summer 2023, although affordability remains a challenge for those needing higher loan-to-value mortgages. The Bank of England began increasing base rates, which influence mortgage interest rates, in December 2021 to control soaring inflation.
The Bank's base rate seems to have peaked at 5.25% in August. Mortgage rates have started to fall in anticipation of future reductions. Bellway revealed that it had completed the construction of 4,092 homes in the six months to the end of January, a decrease of around 1,600 from the same period a year earlier.
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The average selling price stood at £309,300, a slip from £316,929. Bellway's chief executive, Jason Honeyman, said: "Bellway has delivered another resilient performance in a period of challenging trading conditions. While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints.
"We are encouraged by the seasonal pick-up in customer leads and an improvement in reservations since the start of the new calendar year. We have maintained balance sheet resilience and, supported by the strength of our land bank, Bellway remains well-placed to capitalise on future growth opportunities and will continue to play an important role in increasing housing supply in the years ahead."