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Highlights
- The mortgage lending in the UK witnessed one of the strongest years in 2021 amid stamp duty holidays and solid underlying demand for new homes.
- The stable and positive outlook towards the housing market could benefit mortgages lenders in the UK in the coming year as well.
The mortgage lending in the UK witnessed one of the strongest years in 2021 amid stamp duty holidays and solid underlying demand for new homes. According to the trade association UK Finance, the estimated gross lending in the UK will be around £316 billion in 2021, which is a rise of nearly 31% compared to 2020 and the highest lending since £357 billion of gross lending in 2007. As a result, 2021 is set to become the record year for mortgage lending since 2007.
Underlying high demand from consumers for big space amid remote working scenarios after the pandemic has been the main driver for solid lending in 2021. Moreover, the gross lending is estimated to be £281 billion in 2022 and £313 billion in 2023. As per experts, the lending figures might get stabilised next year as the UK housing market softened following the end of the stamp duty holiday, which was one of the reasons for the boost in the housing market.
In addition, the total purchase transaction is expected to reach 1.5 million in 2021, a rise of 47% than 2020 as per the UK Finance estimate. The stable and positive outlook towards the housing market could benefit mortgage lenders in the UK. The growth in the housing market will positively impact the lending businesses.
Let us look at 3 FTSE listed lending stocks that are expected to benefit from the positive housing market trend:
Lloyds Banking Group Plc (LON: LLOY)
The FTSE 100 listed company provides financial services to retail and commercial clients. The lender operates in the UK and other European countries, serving over 25 million customers. It is one of the largest mortgage lenders in the UK, having the highest market share amongst all lenders. For the nine months to 30 September 2021, the company reported a total income of £11,072 million, out of which net interest income was £8,249 million. The company’s interest-earning assets improved during the period driven by growth in the mortgages book.
Lloyds Banking Group Plc’s last close was at GBX 46.34 on 10 December 2021, with a market cap of £32,903 million. In the last one year, the stock has given a 36% return to its shareholders.
Nationwide Building Society (LON: NBS)
The company offers financial services like residential mortgages, personal and car loans in the UK. The lender reported gross mortgages lending of £18.2 billion in the six months to 30 September 2021. Its total market share stood at 11.4% in a highly competitive market resulting in net interest income of £1,706 million and underlying profit before tax of £850 million.
Nationwide Building Society’s last close was GBP 189.50 on 10 December 2021, with a market cap of £2,000.2 million. In the last one year, the stock has given a 6.76% return to its shareholders.
Natwest Group Plc (LON: NWG)
The banking and financial service provider has operations in the UK and other countries. It provides retail and commercial banking services to its clients. The company witnessed strong mortgage growth driven by property purchases after the Covid-19 pandemic. As a result, the net interest income was at £5,870 million for the first nine months of 2021, while the profit for the period stood at £2,814 million.
Natwest Group Plc’s last close was at GBX 216 on 10 December 2021, with a market cap of £24,397 million. In the last one year, the stock has given a 43.66% return to its shareholders.
