Bellway boss ‘encouraged’ as mortgage rates start to fall

The boss of Newcastle-based housebuilder Bellway has been “encouraged” as the reduction in mortgage rates in recent months has made buying more affordable for potential customers.

Jason Honeyman said the business is on track to build around 7,500 homes in the year to the end of July. It has scaled back the speed of construction from nearly 11,000 the year before.

It came in a bruising period for housebuilders. Since December 2021, the Bank of England’s base interest rate has soared from 0.1% to 5.25%, making it much less affordable for people to buy homes.

In anticipation that the Bank might start cutting rates later this year, lenders have started to cut the interest rates they charge mortgage borrowers.

“Although the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates throughout the first half has helped to ease affordability constraints and we have been encouraged by the improvement in reservations since the start of the new calendar year,” Mr Honeyman said.

The business completed 4,092 homes in the six months to the end of January, down from 5,695 a year earlier. The average selling price was £309,278, down from £316,929, in line with the firm’s expectations.

In the full financial year, the business expects the average selling price to be £295,000.

Revenue dipped 29.6% to £1.3 billion in the six-month period while pre-tax profit fell 61.6% to £117.4 million.

“Overall, the long-term fundamentals of the UK housebuilding industry remain attractive, given the shortage of energy efficient and affordable homes across the country,” Mr Honeyman said.

“We remain confident that the group’s robust balance sheet and operational strength, combined with the depth and quality of our land bank, will enable Bellway to successfully navigate changing market conditions and capitalise on future growth opportunities.”

Separately, fellow housebuilder Vistry said that it had signed an agreement with Abri, a housing provider, to deliver 1,500 new homes in Arundel, West Sussex.