Government plan to prop up UK banking sector could bring boost for mortgage lending
Housebuilding shares have rallied this morning following an announcement by the government that it will spend £50bn propping up the banking sector.
The plan will see the government pump new capital into the banks and provide an extra £200m to money markets under its special liquidity scheme.
The rises come amid speculation that there will be an interest rate cut of between 25 and 50 basis points tomorrow.
In early trading the following stocks rose:
- Taylor Wimpey (32%)
- Barratt (11%)
- Persimmon (9%)
- Redrow (10%)
- Bellway (6%)
- Bovis (9%)
- Berkeley (2%).
Numis analyst Chris Millington said that the rises bucked the trend across the stock market largely because of indications by chancellor Alastair Darling that banks should use the fresh cash to boost mortgage lending.