Why did Newbury Building Society launch shared ownership products?

Newbury Building Society recently announced the launch of several shared ownership fixed rate products.

So is this a sign of renewed interest in the product type? And what is its trajectory going forward?

Why was it important to launch shared ownership deals now? 

Roger Knight (pictured), lending manager at Newbury Building Society, said the market has endured a turbulent time of late, resulting in affordability restrictions and limitations. This is particularly true for those trying to secure their first home.

“Shared ownership has been consistently underserved due to the volatility in rates this year, so when we saw an opportunity to bring some new products to market, we took it,” he said.

Knight believes that shared ownership products can help support those facing limitations in accessing the housing ladder or those intending to climb up it.

Are shared ownership products becoming more popular?

Knight said demand for shared ownership products from consumers has risen considerably recently.

“A range of factors have contributed to this increase in demand for shared ownership mortgages, particularly rising private rental costs and lack of rental properties, the end of the Help to Buy scheme, and higher affordability thresholds for buy-to-let landlords,” he said.

In addition, Knight believes that consumers are also beginning to understand the shared ownership scheme more, which has been achieved through educational material becoming more widely available.

“At the society, we have done a lot of work in terms of demystifying the scheme, particularly by putting together case studies so people can see how it works in practice; I remember in the early days, many people thought that they would not be allowed to decorate their homes, or that it was only for first-time buyers,” Knight added.

With Help to Buy now in the rearview mirror, Knight said, shared ownership is a critical offering for those seeking affordable housing, and he believes it is key that lenders continue to educate borrowers about how it could potentially help them on to the ladder.  

What is the trajectory of demand for shared ownership?

Feedback from brokers, Knight said, suggests they believe the market is nearing the peak of the interest rate cycle. As such, he added that more customers are now looking for the security of a fixed rate for a couple of years with a view to reviewing their options down the line.

“Like many others, I am reticent to make predictions about what could happen with shared ownership long down the line, but I feel confident in saying that there is most definitely a place in the market for good shared ownership products, and they will continue to provide a much-needed route to homeownership for many,” he said.

With house prices staying high, Knight said first-time buyers are often shut out of the market unless they have significant help from the Bank of Mum and Dad. Higher mortgage rates and instability have also, understandably, he said, put many off buying their first home for the time being. 

“The rise of shared ownership products can only be positive for the wider housing market, giving first-time buyers, those on lower incomes, and single buyers more opportunity to own their own homes,” Knight added.

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