3 stocks to keep an eye on amid mortgage approvals slump

February 01, 2023 01:44 PM GMT | By Manu Shankar
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Highlights

  • The mortgage borrowings in the UK have fallen to around 35,600 in December.
  • In September, mortgage rates had touched a peak of 6.65%, before resting at around 5% in recent months.

As the UK continues to reel under inflation and rising interest rates, UK mortgage approvals seem to have dipped in the past few months. The homebuyers are keener to put their buying dreams on hold for now amid the rising interest rates.

According to Bank of England data, the mortgage borrowings in the UK fell to around 35,600 in December. The mortgage borrowings data for November stood at 46,200 in November. Previously, the market felt the jitters following the disastrous mini-budget, which resulted in an overall increase in the cost of borrowing. Experts believe that with the recent development, mortgage approvals are likely to remain mute for some time, resulting in a knock-on effect on property prices.

In September, mortgage rates had touched a peak of 6.65% before resting at around 5% in recent months. But with the Bank of England expected to raise the interest rates once again, it is likely that the base rate could move to 4% from the current 3.5%.

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According to data from Halifax, housing prices have dipped in the last quarter of 2022 after witnessing two years of explosive growth. Analysts are predicting that house prices in 2023 could fall by 30%.

Amid this, let’s look at some mortgage-related stocks listed on the London Stock Exchange.

Real Estate Credit Investments Ltd (LON: RECI)

Operating primarily in the UK, Germany, and France, Real Estate Credit Investments Ltd on 1 February 2023 was trading at GBX 142 and was up by 3.65% at 12:00 PM (GMT). The RECI stock has given its shareholders a positive return of 5.09% on a YTD basis. Meanwhile, over the past year, it has given negative returns of -10.35%. RECI boasted of a market of £314.19 million, with an EPS of 0.11.

Lloyds Banking Group Plc (LON: LLOY)

UK-based financial services group Lloyds Banking Group Plc, on 1 February 2023, was trading at GBX 52.78 and was witnessing a gain of 0.38% at 12:00 PM (GMT). The FTSE 100 index constituent enjoyed a market cap of £35,379.95 million and has given positive returns on both one year and YTD basis at 3.3% and 16.1%, respectively. LLOY had a turnover (on book) of £5,175,920.44 and an EPS of 0.08.

OSB Group Plc (LON: OSB)

The mortgage service specialist, OSB Group, holds a market cap of £2,344.93 million. The shares of OSB Group traded at GBX 553.50 and were up by 1.50% on 1 February 2023 at 12:00 PM (GMT). The OSB stock has given its investors positive returns of 15.78% and 1.28% on a YTD and a one-year basis.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated, taking into consideration the associated risks.


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