Sharecast - Housebuilders surged, led by Bellway (LON:BWY) as mortgage approvals rose in February for the first time since last summer, official data showed on Wednesday, as the UK housing market started to shake off last autumn’s mini budget.
According to the Bank of England’s latest Money and Credit report, net mortgage lending to individuals decreased to £700m last month from £2bn in January. That is the lowest level since July 2021, or since April 2016 if the pandemic is excluded.
The effective interest rate - the actual interest rate paid - on newly drawn mortgages was 4.24%, a 36 basis point increase.
However, net approvals for house purchases, an indicator of future borrowing, increased to 43,500 from 39,600 in January, the first monthly uptick since August 2022 and above consensus expectations of 42,000.
The figure remains well below the 2015 to 2019 average of 66,500, however, and is down sharply on February 2022, when it was 69,100.
Mortgage rates soared following the government’s disastrous mini budget last September, which featured £45bn of unfunded tax cuts. But they started to ease after most of the measures were scrapped and the political landscape stabilised.
Interest rates, meanwhile, have increased 11 times since December 2021 to now stand at 4.25%.
Essentra confirmed its £150m return to shareholders and maintained guidance as it posted lower full-year profits after taking a large hit from the disposal of its packaging and filters businesses.
The FTSE 250 company, which makes specialised components such as moulded plastics and custom hinges, posted a pre-tax £183.8m loss for 2022, compared with a profit of £28.3m in 2021.
Essentra finalised the sale of its filters and packaging divisions at the back end of 2022, incurring a £182.7m goodwill charge from the former business, leaving it as a pure components operation.
On an adjusted basis, pre-tax profits to 37% to £7m while revenue rose 12% to £338m. Shareholders will receive £90m via a special dividend of 29.8p a share and a £60m buyback from the sale of the two operating units.
“The business has the ability to manage volume impacts through implementation of pricing actions, and careful cost management, validated by historical through-cycle margin resilience,” Essentra said.
Distributors have continued to show signs of destocking impacting the US in particular, with improvements in China as the country relaxed its tough zero-Covid rule regime, and European trade continued to be robust. New order intake was around 8% ahead of 2022 on a like-for-like basis, it added.
The group also protected margins by implementing price hikes to offset rising costs from freight, labour, energy and materials.
The packaging division was sold for £262m to Austrian manufacturer Mayr-Melnhof Group, while the filters arm was bought for £312m by Frank Acquisition Four, a subsidiary of Centaury Management.
FTSE 250 - Risers
Bellway (BWY) 2,172.00p 6.42%
Hammerson (HMSO) 22.62p 5.65%
Wood Group (John) (WG.) 202.10p 5.48%
Synthomer (LON:SYNTS) (SYNT) 114.90p 4.93%
Inchcape (INCH) 737.50p 4.68%
Bridgepoint Group (Reg S) (BPT) 213.00p 3.90%
Redrow (LON:RDW) 467.80p 3.59%
Vistry Group (LON:VTYV) (VTY) 759.50p 3.54%
Watches of Switzerland Group (WOSG) 781.00p 3.10%
Dr. Martens (DOCS) 134.70p 3.06%
FTSE 250 - Fallers
Digital 9 Infrastructure NPV (DGI9) 64.80p -4.00%
Baltic Classifieds Group (BCG) 149.20p -3.12%
Syncona Limited NPV (SYNC) 144.60p -3.08%
TUI (LON:TUIT) AG Reg Shs (DI) (TUI) 681.40p -2.93%
Genus (LON:GNS) 2,770.00p -2.33%
HICL Infrastructure (HICL) 147.40p -2.25%
Auction Technology Group (ATG) 591.00p -2.15%
Abrdn Private Equity Opportunities Trust (APEO) 423.00p -2.08%
Caledonia Investments (LON:CLDN) 3,315.00p -2.07%
W.A.G Payment Solutions (WPS) 90.60p -2.05%