Homebuilders are racing on the stock market with investors ‘nervous’ about mortgage rates

Monday, June 20, 2022 3:31 p.m.

Homebuilders lead the biggest fallers on the London Stock Exchange today after the latest house price data warned of the tightening of purse strings amid the global crisis Cost of life.

Barratt Developments and Berkeley Group led the descent, falling just over 4% each. While Persimmon plunged 3.7%, Ashtead fell 2.8% and Taylor Wimpey fell 2.5%.

The plunge into red comes from the back of real estate site Rightmove’s House Price Index, released this morning, which added another voice to the chorus of onlookers expecting record house prices to begin to slow, as the move falls on the list of financial priorities for the British.

Just last week, fellow homebuilders FTSE Bellway and Crest Nicholson saw their shares rise in response to rising house prices, which bosses say led to trade updates optimists on Tuesday.

And while the average cost of a home continues to rise, to a current figure of £368,614 – another for the fifth consecutive month – buyer demand fell 8% in May, compared to April, according to Rightmove.

However, changes to the Bank of England’s stress tests for mortgages are also making investors “worried about the future course of mortgage rates”, said Anthony Codling, CEO of property site Twindig and a former director of Jefferies. AM City.

From early August, the BoE will withdraw its mortgage affordability stress tests, which Codling said weighed heavily on selling.

“Some investors are concerned about what happens when mortgage rates rise without verification of the integrity of affordability stress tests,” added Codling, who assured that the Financial Conduct Authority’s mortgage rules ensure affordability assessments remain in place.