Winkworth warns on profits as rising mortgage costs hit housing market
London estate agent Winkworth warns of profits as rising mortgage payments continue to hurt the housing market
Earnings warning: Winkworth chief exec Dominic Agace
Winkworth has warned that profits at the London estate agent will take a hit as buyers are put off by skyrocketing mortgage payments.
Dominic Agace, the CEO, said full-year earnings are likely to be “below market expectations” as potential buyers are deterred, putting a large number of pending transactions on hold.
He warned, “There is a lack of confidence…people slow down in what they do. Real estate needs certainty, and uncertainty is bad for transactions’.
It came as the company reported a 20 percent drop in sales in the first half of this year, while applications fell 5 percent. As a result, shares fell 1.7 percent, or 2.5 pence, to 142.5 pence.
Mortgage rates in the UK have risen as the Bank of England raised interest rates to reduce inflation. As a result, two-year fixed home mortgage rates are at their highest level in 15 years of 6.7 percent.
The Bank said yesterday that nearly 1 million homeowners face an extra £3,000 a year or more on their mortgages if interest rates rise.
Winkworth’s rental business enjoyed a more positive outlook, with sales up 11 percent as potential buyers were pushed into the rental sector instead.
Rents are expected to continue to rise as the housing shortage widens. Agace is confident the slump is not permanent, though the rest of the year is expected to remain uncertain.
He added: “While the directors believe confidence will return once buyers have access to a wider choice of mortgage finance, the outlook for sales in the second half remains uncertain.”
Founded in Mayfair in 1835, the broker has more than 100 franchises, mainly in London and the South East.