Home loan fears demolish house builder share prices

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Barratt, the UK’s largest builder of homes, said it had seen an impact from mortgage rate hikes and reduced availability.

It comes as a survey today from the Royal Institution of Chartered Surveyors warned of “storm clouds” gathering.

The number of would-be home buyers fell in September for the fifth month running, with properties coming on the market also down and members predicting prices will dip.

Simon Rubinsohn, RICS’ chief economist, said: “The turmoil in mortgage markets in recent weeks has compounded the increasing level of economic uncertainty resulting from higher energy bills and the wider cost of living crisis, in shifting the dial in the housing market.”

Barratt also blamed the cost of living crisis for a sharp year-on-year fall in reservations.

It added: “The outlook for the year is less certain with the availability and pricing of mortgages critical to the long-term health of the UK housing market.”

Barratt’s share price slumped as much as 8% in early trading, despite chief executive David Thomas saying full-year profits were still on track to be in line with current expectations.

The update triggered a sell-off in other house builders’ stocks, with Berkeley, Taylor Wimpey and Persimmon closing down between 3.1 and 6.2 percent.

It comes amid nervousness among investors that the housing market is heading for a sharp slowdown.

Lenders have pulled hundreds of mortgage deals since Chancellor Kwasi Kwarteng mini-Budget last month to concerns over borrowing costs.

Sophie Lund-Yates, an analyst at investment platform Hargreaves Lansdown, said: “A deterioration in the affordability of mortgages, especially for first-time buyers, is just about the biggest spanner that could be thrown at the builders.”

Russ Mould, investment director at broker AJ Bell, said: “If government ministers needed any evidence of how policy missteps can affect not just the financial markets but the real economy, then Barratt Developments’ first quarter results statement provided it in spades.”

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