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Highlights
- Latest figures have revealed that mortgage approvals in the country have plunged by 10% in September.
- The mortgage approvals for buying properties have dropped sharply from 74,400 in August to 66,800 in September, as per BoE’s recent data.
- While mortgage lending remained untouched at £6.1bn, there was a hike of 29bps in the actual interest rate paid on freshly taken mortgages, pushing it up to 2.84%.
As the Bank of England (BoE) intends to lift the interest rates, borrowing is becoming more costly in the UK. A look at the figures would reveal that mortgage approvals in the country plunged by 10% in September. Not just that, even consumer credit has also taken a hit.
According to the BoE data, the mortgage approvals for buying properties have dropped sharply from 74,400 in August to 66,800 in September.
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While mortgage lending remained untouched at £6.1 billion, there was a hike of 29bps in the actual interest rate paid on freshly taken mortgages, pushing it up to 2.84%. KPMG’s UK chief of financial services, Karim Haji, has reportedly said that lenders have responded to the mortgage market turbulence by repricing the rates or entirely withdrawing the products.
As per Bestinvest’s finance analyst, Alice Haine, the market was in turmoil over the first three weeks of September, mainly due to the BoE’s rate hike expectations. On 22 September, the rate was lifted by 50bps to 2.25%, and this rate hike trend is expected to continue, with the bank expected to raise the rate further by 75bps to 3% this week.
As past data has shown that mortgage rates move higher with interest rates, the country’s mortgage market continues steering through turbulence, and this trend is expected to continue shortly. However, amid the rising mortgage costs, Brits are awaiting the property rates to drop by next year.
Amid these, Kalkine Media® deep dives into performances of the following mortgage stocks.
Real Estate Credit Investments Ltd (LON: RECI)
The YTD (year to date) and one-year returns of the firm making investments in real estate debts, Real Estate Credit Investments Ltd, stand at -15.31% and -13.91%, respectively, as of 1 November. RECI shares were experiencing a surge of 0.39% at around 10:20 AM (GMT) on Tuesday, trading at GBX 130.00. At the time of writing, RECI’s market cap stands at £269.99 million, along with an EPS of 0.11. The firm has a turnover of £9,660.30 at present.
Paragon Banking Group plc (LON: PAG)
With a market cap of £1,008.44 million, Paragon Banking Group’s YTD and one-year returns have witnessed negative returns at -23.78% and -21.28%, respectively, as of 1 November. However, PAG shares were experiencing a surge of 0.84% at around 10:20 AM (GMT) on Tuesday, trading at GBX 431.60. The firm has a turnover of £968,568.93 at present.
OSB Group plc (LON: OSB)
The YTD and one-year returns of the lender, which invests in distinct sections of the mortgage market, OSB Group plc, stand at -23.86% and -16.58%, respectively, as of 1 November. OSB shares were experiencing a surge of 1.88% at around 10:20 AM (GMT) on Tuesday, trading at GBX 422.60. At the time of writing, the FTSE250 firm’s market capitalisation stands at £1,780.60 million, with an EPS of 0.76. The firm has a turnover of £318,726.45 at present.
