Lloyds Bank expects the housing market to have turned up again by the end of 2024 as the cost of mortgages becomes cheaper.
Speaking after first-quarter numbers this morning, finance head William Chalmers said the bank is now pricing in a 1.5% rise in house prices this year compared to earlier estimates of a dip of 2.2%.
A benign economic outlook and a more resilient housing market than expected were behind the revision, with the bank still penicilling in three interest rate cuts from the Bank of England over the remainder of the year.
Lloyds earlier reported a 28% drop in first-quarter profits to £1.2 billion due largely to a one-off surge in mortgage redemptions at the end of 2023, noted Chalmers, as mortgage borrowers rushed to take advantage of lower rates.
“This represented customers just pausing in terms of their willingness to re-engage in the mortgage market, and choosing to do so in the first quarter instead.”
Analysts said profit was 2% below the consensus City forecast, with misses on net interest income (NII) and costs largely offset by lower-than-expected impairment charges.
Lloyds shares dipped early on but rallied after the additional comments from management and were trading up 1.7% at 52.2p in afternoon trading.