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Highlights:
- Several banks have withdrawn offers on mortgages amid rumours of another interest rate hike.
- The move comes after the pound sterling dipped to a record low against the US dollar.
The pound sterling on Monday had a day to forget as it tumbled to an all-time low against the US dollar. It has been a drastic fall for pound which has been on a freefall following Chancellor Kwasi Kwarteng's mini-budget on Friday. Aimed at easing the cost-of-living crisis, the Chancellor announced tax cuts in the budget to the tune of £45 billion. However, the market didn't react positively to the news amid concerns that the package would increase the government debt.
The pound touched an all-time low of $1.0327 in the early hours of Monday before finally improving a little, causing the Bank of England (BoE) to issue a statement that it was closely monitoring the developments and would not hesitate to raise the interest rates further if required. The bank has, however, ruled out an emergency meeting on interest rates.
Image source: ©2022 Kalkine Media®
Several lenders have pulled back mortgage offers after the central bank's warning. According to a report by The Telegraph, Halifax, Virgin Money, and Skipton are among the lenders who took this step.
Mortgage repayments to rise
Another report by The Telegraph has claimed that the markets expect the interest rates to rise by 0.75 percentage points, which would take the rate to 3% from the current 2.25%. If the bank goes ahead with the hike, the average mortgage repayments will increase by as much as £100 a month, and the report cited an analysis by estate agency Hamptons.
Amid the latest developments, Kalkine Media® explores two banking stocks that investors can explore.
HSBC Holdings Plc (LON: HSBA)
HSBC Holdings is a major lender in the country and a constituent of the blue-chip FTSE 100 index. Earlier this month, its chief executive Ewen Stevenson said the bank may resume the share buyback program in the second half of 2023. Currently, the bank holds a market capitalisation of £100,159.68 million and an EPS of 0.62. Over the past 52 weeks, the stock price has appreciated by 34.00%, while it has increased by 12.09% on a year-to-date basis. As of 8:04 am GMT+1, HSBC's shares traded at GBX 503.00, up 0.28%.
Standard Chartered Plc (LON: STAN)
The leading international banking group has operations in 59 countries. With a market cap of £16,964.38 million, the lender is listed on the FTSE 100 index. Its stock price has jumped by over 37% in the past 12 months. The increase has been slightly lower at 31.62% on a year-to-date basis. Shares of Standard Chartered were trading 0.83% higher at GBX 586.40 as of 8:12 am GMT+1 on 27 September 2022.
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.
