Homebuyer interest dipped in April and May following a jump in mortgage rates, while building costs have climbed due to the Middle East energy shock, housebuilder Bellway has said. The Newcastle-based company warned that recovery in the housing market could be slowed as a result of these challenges.
Impact of Mortgage Rate Rise
Mortgage rates shot up after the onset of the US-Israel conflict with Iran at the end of February, and many mortgage deals were pulled amid financial uncertainty prompted by the war. This led to a slowdown in customer demand for homebuying, following a positive start to the spring season, Bellway said. Private reservations for new homes decreased to 151 per week between February and May 29, down from 161 in the same period of 2025.
Building Costs Rise
Higher fuel and energy prices following the conflict have been pushing up the cost of building materials, according to the firm. It noted that some suppliers had introduced surcharges to cover the increased costs. Chief executive Jason Honeyman said: “Bellway continues to perform robustly in an increasingly challenging market, with customer demand having moderated in recent weeks, after a positive start to the spring selling season. The outlook beyond the current financial year remains uncertain, reflecting ongoing geopolitical tensions in the Middle East and a less predictable domestic political environment.”
Outlook and Forecasts
Bellway said it was still expecting to build between 9,300 and 9,500 homes over the 2026 financial year to the end of July. This would be more than the 8,750 homes completed the previous year. It was also sticking to previous expectations of reporting an underlying operating profit of between £320 million and £330 million.
