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Highlights
- Panic among Brits looking to purchase a house shot up last month following Kwarteng’s recent mini-budget announcements.
- The Bank of England has been consistently raising its base rate, which impacts all kinds of loans and mortgages in the UK.
- As compared to last year’s 2.25%, the average rate for a 2-year fixed mortgage exceeded 6% this week, as per Moneyfacts.
With mortgage rates going up, panic among Brits looking to purchase a house shot up last month following Kwarteng’s recent mini-budget announcements. While several argued that the budget may raise inequality and hinder growth, it included a positive move for home buyers i.e., a stamp duty cut. However, despite the cut benefiting some buyers, the gains would potentially be outweighed by the rising mortgage rates.
The Bank of England (BoE) has been consistently raising its base rate, which impacts all kinds of loans and mortgages in the UK. As compared to last year’s 2.25%, the average rate for a 2-year fixed mortgage exceeded 6% this week, as per Moneyfacts. Borrowers are scared that they won’t be able to pay for their mortgage if the rates continue to rise.
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Cabinet ministers have recently accused the central bank for the soaring mortgage rates as their relationship continues to worsen. Government officials claim that the bank has failed to control the rising inflation, which has in turn led to soaring interest rates.
However, house prices are expected to fall gradually as interest rates keep rising amid the ongoing cost of living crisis. The prices have plunged for the third consecutive month in September, and the trend is expected to continue over the coming months. The housing market is gradually slowing down due to rising unaffordability among buyers.
Amid these developments, UK investors can explore the following mortgage stocks listed on the London Stock Exchange.
OSB Group plc (LON: OSB)
The YTD (year to date) return of the company which serves the unmerited sub-sections of the mortgage market, OSB Group plc, stands at -17.06% as of 10 October. With an EPS (earning per share) of 0.76, the FTSE 250-listed firm’s return on yearly basis stands at -23.79%. OSB shares were trading at GBX 422.60 on Monday, seeing a fall of 1.81% at around 10:30 AM (GMT+1). At the time of writing, the company’s market capitalisation stands at £1,861 million. Having a low P/E ratio of 5.06, the company presently has a turnover (on book) of £842,371.73.
Real Estate Credit Investments Limited (LON: RECI)
The YTD return of the investment firm specialising in the real estate credit markets of Europe, Real Estate Credit Investments Limited, stands at -12.05% as of 10 October. With an EPS of 0.16, the company’s return on yearly basis stands at -11.18%. RECI shares were trading at GBX 135.00 on Monday, rallying by 1.50% % at around 10:40 AM (GMT+1). At the time of writing, the company’s market capitalisation stands at £305.01 million. Having a P/E ratio of 12.41, the company presently has a turnover (on book) of £9,552.60.
Paragon Banking Group plc (LON: PAG)
The YTD return of the prominent UK-based business offering mortgages as well as personal loans, Paragon Banking Group plc, stands at -27.98% as of 10 October. With an EPS of 0.65, the FTSE 250-listed firm’s return on yearly basis stands at -17.06%. PAG shares were trading at GBX 408.00 on Monday, seeing a fall of 0.83% at around 10:45 AM (GMT+1). At the time of writing, the company’s market capitalisation stands at £976.08 million. Having a low P/E ratio of 5.30, the company presently has a turnover (on book) of £58,729.74.
