Shares in UK housebuilders slump as inflation woes increase prospect of rate hikes
Shares in some of the UK’s biggest housebuilders closed down today after Berkeley Group warned that its sales could fall by up to 20 per cent as rising mortgage rates rock the housing market.
Berkeley’s share price fell around 3 per cent this morning following its announcement, but recovered slightly closing down 1.56 per cent.
Other housebuilders followed suit, with Vistry Group, Persimmon Homes and Barratt Developments shares falling by 2.70 per cent, 3.68 per cent and 3.79 per cent respectively.
Shareholders were also hesitant to pump money into housebuilders after new figures revealed today that inflation was failing to come down, raising the prospect for more interest rate hikes and even higher mortgage rates.
According to Moneyfacts, the average rate on a two-year fixed rate mortgage has now climbed over six per cent, while the average rate available on a five-year deal is around 5.8 per cent.
“It’s no surprise to see housebuilders among the top fallers on the FTSE 350 index as the prospect of higher borrowing costs could prove damaging to the property market as affordability issues become more acute,” Danni Hewson, head of financial analysis at AJ Bell, said.
Michael Hewson, chief analyst at CMC markets, said concerns about a housing market slowdown were now gathering pace.