- UK mortgage lending is forecast to be 6 per cent higher this year, against 2019 volumes
- Growing market share meant gross mortgage completions grew in a declining market last year
The extension of the stamp duty holiday and the prospect of government-backed 95 per cent loan-to-value mortgages should drive activity higher this year, Mortgage Advice Bureau (MAB1) has said.
The Intermediary Mortgage Lenders Association expects a 16 per cent increase in gross new mortgage lending for this year to £283bn, which represents a 6 per cent increase compared to 2019 - and that bullish forecast was prior to the government’s housing-friendly Budget announcements.
Last year, the mortgage intermediary grew gross mortgage completions by 5 per cent, against a 9 per cent decline in the broader market following the second quarter lockdown.
That was thanks to a rising market share that reached 6.3 per cent, up from 5.7 per cent in 2019.
The rebound in activity during the second half of the year also meant recruitment picked-up. The average number of active advisers were up 6 per cent excluding the acquisition of First Mortgages, and 9 per cent with the business included. However, the second quarter lockdown did mean average revenue per adviser fell 5 per cent.
Analysts at Peel Hunt forecast adjusted pre-tax profits of £24.3m and EPS of 37.6p in 2021, rising to £27.9m and 42.9p, respectively, the following year. However, solid earnings expectations are reflected in a price/ earnings ratio of 28, which is considerably higher than the shares’ five-year average. Hold.
Last IC View: Hold, 720p, 29 Sep 2020
MORTGAGE ADVICE BUREAU (MAB1) | ||||
ORD PRICE: | 1,078p | MARKET VALUE: | £ 573m | |
TOUCH: | 1,055-1,090p | 12-MONTH HIGH: | 1,215p | LOW: 405p |
DIVIDEND YIELD: | 2.4% | PE RATIO: | 45 | |
NET ASSET VALUE: | 67p* | NET CASH: | £30m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2016 | 92.8 | 15.2 | 25.6 | 18.3** |
2017 | 109 | 14.5 | 23.8 | 21.4 |
2018 | 123 | 15.7 | 25.9 | 23.3 |
2019 | 144 | 17.7 | 28.2 | 17.5 |
2020 | 148 | 14.9 | 23.7 | 25.6 |
% change | +3 | -16 | -16 | +46 |
Ex-div: | 29 Apr | |||
Payment: | 28 May | |||
*Includes intangible assets of £18.3m, or 34p a share **Excludes special dividend of 5.35p per share |