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Highlights
- Mortgage approvals in the UK drop in July as stamp duty holiday tapers off.
- Consumers repaid £1.4 billion of mortgage debt on net in July.
- The effective rate on new personal loans remained low at 5.85%.
A fall of 6.4% in the month of July was witnessed in the UK mortgage approvals, down from 80,300 in June to 75,200, as the end of the stamp duty holiday set in, according to the data published by Bank of England (BoE) on Tuesday. For the month of July, economists had anticipated approximately 79,000 approvals for house purchases, which are basically an indicator of future borrowing. However, the approvals hit the lowest levels since July 2020, but remained above pre-February 2020 levels. The approvals were 16% ahead of the 10-year average even though there was a reduction.
This comes along with a 7.6% increase in the average price of a house over the last 12 months. In comparison to the 2020 average, buyer demand remains strong, and increased by 20.5% in July. According to the BoE data, £1.4 billion ($1.9 billion) in mortgage debt on net was repaid by individuals in the month of July, after the £17.7 billion record high net borrowing in June. As per BoE, net repayments are relatively rare, and only one other repayment was done in April 2020 over the past decade.
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Additional consumer credit, on net, wasn’t borrowed by consumers elsewhere in borrowing, as per BoE. The effective rate on new personal loans was the highest since March 2020 but remained at a low level of 5.85%. A decrease in the households’ net flow into deposit accounts was witnessed in the month of July, to £7.1 billion. Deposit interest rates proceeded to drop down to a slight extent to new historically low levels. Here we take a look at 5 stocks you may consider with this development.
Big Yellow Group plc (LON: BYG)
Bagshot-based self-storage company Big Yellow Group is the largest self-storage company across the UK. The company has the highest brand awareness in the sector. With a significant market capitalisation of £2,873.06 million, the company is listed on the London Stock Exchange, and is also a constituent of the FTSE 250 index. Its earning per share is 1.52 and 1-year return is 42.26%.
BMO Commercial Property Trust Ltd (LON:BCPT)
London-based company, BMO Commercial Property Trust, is a large British investment trust which is dedicated to investments in commercial properties. It was previously known as F&C Commercial Property Trust. With a market capitalisation of £788.75 million, the company is listed on the London Stock Exchange, and is also a constituent of the FTSE All-Share index. Its earning per share is 0.03 and 1-year return is 44.98%.
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Grainger PLC (LON: GRI)
Headquartered in Newcastle upon Tyne, Grainger plc has been investing in homes since 1912, and is one of the largest professional landlords across the United Kingdom. The property business has a significant market capitalisation of £2,156.21 million and is listed and traded on the London Stock Exchange. It is also a constituent of the FTSE 250 index. Its earning per share is 0.14 and 1-year return is 2.04%.
Derwent London Plc (LON: DLN)
London-based company Derwent London plc is a property investment and development business. The main focus of the REIT is on the central London commercial, residential and office development market. With a substantial market capitalisation of £4,236.81 million, the company is listed on the London Stock Exchange, and is also a constituent of the FTSE 250 index. Its earning per share is 2.54 and 1-year return is 34.12%.
Savills plc (LON: SVS)
London-based company, Savills plc, is one of the leading real estate advisors across the globe. It provides consulting services and transactional advice on matters related to commercial, agricultural and residential property across its 600 offices in the Americas, Europe, Asia Pacific, Africa and the Middle East. With a market capitalisation of £1,952.99 million, the company is listed on the London Stock Exchange, and is also a constituent of the FTSE 250 index. Its earning per share is 0.61 and 1-year return is 70.22%.
