ortgage broker, surveyor and estate agent LSL Property Services warned the Bank of England’s most recent interest rises have led to a “material” slowdown in a previously resilient mortgage market, as it said profits for the second half of the year will be “significantly” lower than previously thought.
The business, which owns estate agent Reeds Rains, surveyor e.surv and a number of brokers, said its broker and surveyor arms had “continued to demonstrate resilience and agility” for the first half of the year.
However, the Bank of England’s June decision to hike interest rates by half a percentage point to 5 per cent, after two successive quarter-point hikes, led to a slowdown in buyer activity.
LSL said: “Whilst group underlying operating profit was broadly in line with our expectations in the first half, the recent change in mortgage market conditions will significantly impact second half group profits which are now expected to be lower than our previous expectations.”
Analysts at Peel Hunt said LSL’s full-year profit could fall to £9 million, less than half of the previously expected £21 million.
LSL CEO David Stewart said: 2LSL made a lot of progress over the past 6 months, delivering important strategic projects. Market conditions have been challenging, and more recently have become more difficult, impacting this year’s financial performance.
“The more challenging market conditions in the short-term will not prevent us from continuing to take the required steps to deliver on the identified opportunities for future growth.
“Notwithstanding the near-term challenges the board remains confident about the group’s medium-term prospects.”
Today the country’s top mortgage lender Halifax revealed that a “degree of resilience” remained in the market as house prices dipped by 2.4% year-on-year in July.
But due to the time taken to complete a purchase, there will be fears that a slowdown in broker and surveyor activity will be a canary in the coalmine for house prices.
Shares in LSL are down 37.6p, or 13.3%, to 244.4p.