BoE says 4 million mortgages to rise next year: Which stocks to watch? - Kalkine Media

December 14, 2022 01:16 PM GMT | By Abhishek Sharma
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Highlights:

  • Mortgage rates have sharply risen in the past few months amid rising inflation and political chaos.
  • The Bank of England has projected that households will face significant pressure to meet their debts over the next year.

With the inflation levels soaring, there are projections that the Bank of England (BoE) will continue to raise the interest rates to bring it under control and prevent it from being embedded into the economy. Rising interest rates have pushed mortgage rates higher, forcing lenders to pull out cheap mortgage deals. Particularly after the mini-budget in September, mortgage rates rose sharply, only easing after Rishi Sunak took over as the prime minister.

As a result of the current economic headwinds, households will face significant pressure to meet their debts over the next year, the central bank has said.

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In its Financial Stability Report, BoE stressed that the economic conditions had worsened, adding that the monthly payments on nearly 4 million mortgages are expected to go up over 2023.

The report further said that the rising interest rates and soaring inflation have increased the risk of households defaulting on loans. However, they are yet to show widespread signs of financial difficulties, the report added.

In the wake of the latest report from the Bank of England, let us explore some mortgage-related stocks listed on the London Stock Exchange.

Lloyds Banking Group Plc (LON: LLOY)

A leading banking and financial services provider in the UK, Lloyds belongs to the FTSE 100 index. The stock holds a market cap of £31,197.00 million, while its EPS (earnings per share) stands at 0.08 as of 14 December 2022. Over the past year, the stock has given a return of 4.28% to investors. Lloyds shares traded 0.23% lower at GBX 46.26 as of 11:35 am GMT on Wednesday.

NatWest Group plc (LON: NWG)

Another leading British lender is the NatWest Group. A constituent of the FTSE 100 index, the company enjoys a market capitalisation of £25,464.50 million, while the EPS stands at 0.25 as of 14 December. The stock value has appreciated by 14.43% over the past year. NWG shares traded at GBX 264.30, up 0.30% as of 11:37 am GMT on Wednesday.

OSB Group Plc (LON: OSB)

OSB Group is an FTSE 250-listed company offering specialist mortgage services to its customers. As of 14 December 2022, the company boasts of a market cap of £2,064.79 million and holds an EPS of 0.76. The one-year return stands at -6.73%. Shares of the company traded at GBX 480.60, down 0.08% as of 11:40 am GMT on Wednesday.

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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