Winkworth warns on profits as rising mortgage costs hit housing market

Winkworth has warned that profits at the London estate agent will take a hit as buyers are deterred by soaring mortgage costs.

Dominic Agace, the chief executive, said full-year profits are likely to ‘fall below market expectations’, as potential buyers are scared off, which has placed a high number of pending transactions on hold.

He warned: ‘There is a lack of confidence… people slow down on what they do. Property needs certainty, and uncertainty is bad for transactions’.

It came as the firm posted a 20 per cent fall in sales for the first half of this year as applications dropped by 5 per cent. This sent shares down 1.7 per cent, or 2.5p, to 142.5p.

UK mortgage rates have risen as the Bank of England has increased interest rates to try to bring down inflation. As a result a two-year fixed residential mortgage rate stands at a 15-year high of 6.7 per cent.

The Bank said yesterday that nearly 1m home owners face having to spend an extra £3,000 a year or more on their mortgages as rates rise.

Winkworth’s lettings business enjoyed a more positive outlook, with revenue up 11 per cent as potential buyers are instead pushed into the rental sector.

Rents are expected to continue to rise as the shortage of properties intensifies. Agace is confident the slump is not permanent, although the rest of the year is expected to remain uncertain.

He added: ‘While the directors believe that confidence will return once buyers can access a broader choice of mortgage finance, the outlook for sales in the second half remains uncertain.’

The estate agent, established in Mayfair in 1835, has more than 100 franchises, mainly in London and the South East.