UK homebuilder offers mortgage holidays to lure reluctant buyers

PERSIMMON is offering new buyers a mortgage holiday in an attempt to boost demand for its homes after higher rates hurt sales.

The UK homebuilder said its new “10 months mortgage free” customer offer has generated strong interest in its first week, said a statement on Thursday (Jan 12). It is too early to say if it will translate into sales, Persimmon added.

Britain’s housing market is facing disruption as it adapts to high borrowing costs and the threat of a house price plunge. Over 800,000 households will see their mortgage rates more than double in 2023 as they come off fixed-rate deals, which is driving predictions of a 10 per cent drop in values this year.

“In the second half of the year, rising interest and mortgage rates, inflation and weaker consumer confidence began to impact customer behaviour across the housing market,” chief executive officer Dean Finch said in the statement. “This change in market conditions gathered pace in the fourth quarter, and is reflected in the reduction in our recent weekly sales rates and a lower forward sales position.”

Persimmon saw weekly private net sales fall to 0.3 in the fourth quarter of the year, compared with 0.77 in the same period a year earlier, according to the statement. That came as the firm’s forward sales position reduced year-on-year to £1 billion (S$1.6 billion), from £1.6 billion in 2021. BLOOMBERG