Shares in the UK’s largest homebuilders slumped Wednesday after the government unveiled fresh details of a new policy designed to help people buy their first home that showed it expected to lend far less than a previous program. The FTSE 350 Household Goods and Home Construction Index dropped as much as 6.49% following Chancellor of the Exchequer John Healey’s Budget statement.
That’s less than 20% of the total lending handed out over the life of the previous government’s Help to Buy policy, a program that was repeatedly upsized after its initial backing of £3.7 billion in 2013. The slump, led by major beneficiaries of the Help to Buy program including Taylor Wimpey Plc, Persimmon Plc and Barratt Redrow Plc, wipes out much of the gain in the companies’ share prices following the initial announcement last month.
“The funding is a lot less than we thought it was going to be,” said RBC analyst Anthony Codling. Funding is only in place for 14,000 homes a year, lower than Help to Buy, he said, adding that he’s “glass half empty” on the new policy. The Your First Home program will provide a 20% equity loan matched with a minimum deposit requirement of 2.5%.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing