MARKET REPORT: Hopes for cheaper mortgages boost UK housebuilders

Shares in British housebuilders rose as a weaker-than-expected rise in inflation fuelled hopes of further interest rate cuts this year.

In a boost for millions of borrowers with mortgages, the 2.2 percent rise in consumer prices in the year to July was less than the 2.3 percent rise expected by economists.

Despite rising for the first time this year, inflation is still just above the Bank of England’s 2 percent target.

Money markets are betting on more rate cuts this year after the Bank this month cut borrowing costs to 5 percent from 5.25 percent, the first cut in four years.

Homebuilders rallied on hopes that lower rates would translate into cheaper mortgages and boost demand.

Persimmon rose 3.4 per cent, or 54.5 pence, to 1,664.5 pence, Barratt Developments added 3.8 per cent, or 20.2 pence, to 549.2 pence, Berkeley Group gained 3.9 per cent, or 200 pence, to 5,330 pence, Taylor Wimpey rose 3.6 per cent, or 5.75 pence, to 163.45 pence and Vistry rose 2.6 per cent, or 34 pence, to 1,352 pence.

Crest Nicholson also advanced a day after rival Bellway pulled out of the race to buy the company. It rose 3.3 percent, or 6.8 pence, to 215.6 pence.

The rally helped propel London’s major markets to a fourth straight session of gains, with the FTSE 100 up 0.6 percent, or 45.82 points, to 8,281.05, while the FTSE 250 advanced 1 percent, or 208.21 points, to 20,952.29.

Entain, the owner of Ladbrokes and Coral, was one of the biggest gainers in blue chips after activist investor Eminence Capital bought £23m worth of shares.

The US asset manager, which also had its eye on Dettol seller Reckitt Benckiser, bought more than 4 million shares at around 575 pence each.

Ricky Sandler, founder and chief executive of Eminence Capital, has been on Entain’s board since January. The gambling giant rose 4.5 percent, or 26.4 pence, to 607.8 pence.

Dowlais boss Liam Butterworth and finance chief Roberto Fioroni bought almost £300,000 worth of shares in the GKN spin-off a day after Dowlais revealed it had been hit by a slump in demand for electric vehicles and could sell its powder metallurgy business. The shares rose 8.4 per cent, or 4.5p, to 636p.

Fund manager Jupiter rose 6.5 percent, or 5.1 pence, to 83.2 pence after a rating upgrade from brokerage UBS. However, first-half profits fell at Balfour Beatty due to higher infrastructure investment costs.

The construction group, which has worked on projects with National Grid, BP and Rolls-Royce, rose 2.5 percent, or 10.2 pence, to 399.4 pence.

Mid-cap firm Molten Ventures added 4.9 per cent, or 18p, to 386.5p after the tech investor hit a key milestone. It has raised £124m from selling stakes in companies, exceeding its £100m target for the year to March 2025.

Homeware brand Ultimate Products was hit by falling demand and reduced orders. Sales fell 6.5 per cent to £155.5m in the year to the end of July, while profits fell 14 per cent to £14.4m.

Shares fell 1.6 percent, or 2.25 pence, to 137.75 pence.

Ixico, a medical data analytics company, won a contract worth almost £2m to work on a trial for Huntington’s disease patients, lifting its share price by 33.3 per cent, or 2.38p, to 9.5p.