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HIGHLIGHTS:
- Mortgage approvals were marginally lower in March in comparison to February, as per the data from the Bank of England.
- The net borrowing mortgage amount by individuals, however, increased to £7 billion in March from £4.6 billion in February.
Amid concerns over the rise in mortgage payments due to high inflation, mortgage approvals witnessed a modest decline in March in comparison to February, data from the Bank of England (BoE) revealed during the week.
As per the BoE, the approvals for March stood at 70,700, slightly lower than 71,000 in February. The net borrowing of mortgage amount by individuals, however, reached £7 billion in March, significantly higher than February's £4.6 billion.
What does this mean?
The numbers reflect the rising prices of homes in the UK. A recent analysis by Rightmove said that the prices in April witnessed the biggest rise for the third month in a row. Besides, these rising prices have also pushed the houses into higher brackets of stamp or tax duty, according to property website Zoopla, which claimed that 4.3 million homes in the UK moved under the higher tax bracket since 2020.
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Additionally, banks have been tightening their mortgage affordability tests due to the rising cost of living, making it harder for people to borrow.
Let us take a look at some mortgage stocks and how they are reacting to the rising property prices.
HSBC Holdings Plc (LON: HSBA)
HSBC Holdings is a leading multinational financial services provider with operations in several countries. It is Europe's second-largest bank and is listed on the FTSE 100 index. HSBC gained the spotlight recently after its largest active investor, China's Ping An Insurance (Group) Co., proposed spinning off a separate Asian business that would be listed in Hong Kong.
HSBC has a market capitalisation of £102,233.21 million. Over the last one year, the share prices have appreciated by 11.31%, while the year-to-date return stands at 12.76% as of 6 May 2022.
OSB Group Plc (LON: OSB)
OSB Group is a specialist mortgage lender and focuses on several sub-segments of the mortgage market like buy-to-let, residential, and asset finance, among others.
The FTSE 250-listed company has a market cap of £2,442.70 million, and its shares have delivered a return of 13.42% to the investors over the last one year as of 6 May 2022.
Mortgage Advice Bureau (Holdings) Plc (LON: MAB1)
The mortgage advice services provider has more than 1,600 advisors across the UK, handling over £16 billion of loans annually. For the year ending 31 December 2021, the group reported revenue of £188.7 million, a 27% rise over the previous year. The adjusted profit before tax rose by 36% to £24.2 million.
Mortgage Advice Bureau’s market capitalisation stood at £627.16 million as of 6 May 2022, and it has given a negative return of 14.05% in last one year.
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.
