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Highlights
- Interest rate hikes are expected to make homeowners with mortgages one of the greatest losers this year, as per Resolution Foundation.
- The thinktank additionally claimed that the wealthier households would gain due to the rate hikes as they would lead to an upsurge in investment and saving income.
- 3 million families are facing a rise of £3,000 per year in their mortgage costs by the ending of the next financial year (2023-24).
Interest rate hikes are expected to make homeowners with mortgages one of the greatest losers this year. Meanwhile, the most well-off households in the UK would potentially gain from higher returns on investments and savings, as per a study conducted by the Resolution Foundation.
The leading thinktank has reportedly said that the way in which the UK Government has been dealing with the inflationary crisis, by significantly depending on the Bank of England’s rate hikes, has put mortgage households at the center of the country’s income crunch.
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In a report that is focused on the extraordinary growth in costs faced by the average UK households, the thinktank has said that 3 million families are facing a rise of £3,000 per year in their mortgage costs by the ending of the next financial year (2023-24).
An increase in mortgage rates and the wider effect of the rising inflationary pressures on food and transport costs will represent a fall of 12% in the real income of an average mortgage household from the financial year 2021-22 to 2023-24.
However, the thinktank claimed that the wealthier section of households would actually gain due to the rate hikes as they would lead to an upsurge in investment and saving income over the coming year.
Taking this into account, Kalkine Media® here explores the performance of three mortgage stocks trading on the London Stock Exchange.
Real Estate Credit Investments Ltd (LON: RECI)
The YTD (year to date) and annual returns offered by Real Estate Credit Investments Ltd, which is a company investing in real estate debts, stood at 6.09% and -8.04%, respectively, as of 11 January. On the same day at around 10:15 AM (GMT), RECI shares were witnessing gains of 0.50 points, or 0.36%, and were trading at GBX 140.50. The company’s EPS (earning per share) stood at 0.11 at the time of writing, and it had a market capitalisation of £321.07 million.
Paragon Banking Group plc (LON: PAG)
The YTD and annual returns offered by Paragon Banking Group plc, which is an FTSE250-listed firm presenting landlords with buy-to-let mortgage finance services, stood at 2.75% and -0.52%, respectively, as of 11 January. On the same day at around 10:15 AM (GMT), PAG shares were witnessing gains of 3.00 points, or 0.52%, and were trading at GBX 580.00. The company’s EPS stood at 0.65 at the time of writing, and it had a market capitalisation of £1,346.98 million.
OSB Group plc (LON: OSB)
The YTD and annual returns offered by OSB Group plc, which is an FTSE250-listed lender majorly investing in the mortgage market, stood at 5.36% and -7.59%, respectively, as of 11 January. On the same day at around 10:15 AM (GMT), OSB shares were witnessing gains of 3.00 points, or 0.60%, and were trading at GBX 506.50. The company’s EPS stood at 0.76 at the time of writing, and it had a market capitalisation of £2,164.39 million.
