Winkworth shares tumble as estate agent issues profit warning amid mortgage slump
Winkworth shares tumbled 14 per cent this morning after the estate chain issued a profit warning due to soaring interest rates and a fresh slump in mortgage approvals.
The company which has over 90 branches across the UK said that the sales market proved more challenging in the second quarter of the year, as rate hikes and hot inflation made buyers hesitant.
It comes as the housing market was showing signs of recovery in early spring, following the fall out of September’s mini budget.
However the central bank’s decision to hike interest rates for the 13th consecutive time sent mortgage lenders into a frenzy.
Just yesterday the cost of a two year fixed rate mortgage soared to 6.66 per cent – the highest in 15 years, spelling fresh pain for prospective buyers.
Winkworth said this concoction of high rates and poor consumer confidence will lead its H1 pre-tax profits to be below last year’s level, noting that the outlook for sales in the second leg of the year remains “uncertain”.
Its preliminary half year figures show that letting sales were 11 per cent higher and sales revenues down by 20 per cent compared with H1 2022.
Winkworth will also pay a dividend of 2.9p per ordinary share for the second quarter of 2023 to shareholders.
“After a first quarter that was in line with management expectations, the sales market proved to be more challenging in the second quarter of 2023 as interest rates rose higher and faster than anticipated,” Winkwotth said.
“Mortgage approvals, which in Q1 recovered from the low levels seen in Q4 2022, were reported below the levels seen in the first half of last year.”
Its shares recovered to near four per cent as the market settled this morning, however it is one of many business in the residential market which share price has been hindered by a tough property climate.