Home builders

UK homebuilders rally behind announcement of new 5% down payment program

Shares of major UK home builders surged on Monday following reports the UK government will once again try to boost homeownership for those struggling to access the housing ladder.

Leading manufacturers, including Persimmon PSN,
+ 0.24%,
Barratt Developments BDEV,
+ 0.09%,
Taylor Wimpey TW,
+ 0.37%,
Bellway BWY,
+ 0.03%,
Crest Nicholson CRST,

and Vistry VTY,
-1.15%
each increased between 5 and 7%.

British media have reported that Chancellor of the Exchequer Rishi Sunak is about to announce a new mortgage guarantee that will allow buyers with just a 5% down payment to buy homes up to £ 600,000. Sunak will present the new budget on Wednesday.

In London, the average price of a house is almost £ 500,000, requiring a deposit of £ 75,000 on a typical mortgage. The average salary in London is less than £ 40,000.

Jefferies analysts said the new program resembled the Mortgage Assistance Program that ran from 2013 to 2017 and saw just over 100,000 guarantees over four years, never more than 4. % of total transactions.

The larger FTSE 100 UKX,
+ 0.25%
rose 1.6%, joining the global rally on Monday after a difficult week in which investors focused on rising bond yields.

The yield of the 10-year gilt TMBMKGB-10Y,
1.163%,
which reached 0.83% last week, was 0.79%. The 10-year US MTUBM USD10Y,
1.612%
gave 1.44%.


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