Winkworth cautions on profits as mortgage crisis weighs on home sales

Estate agency chain Winkworth has issued a profit warning and pointed to soaring interest rates and the mortgage crisis hitting home sales.

The company has more than 100 branches nationwide including 58 offices in London, most of which are run by franchisees.

It showed it was not immune from the impact of lenders passing on the Bank of England’s interest rate rises, with a more “challenging” sales market in the second quarter.

Winkworth’s update came as latest Moneyfacts data revealed the average 2-year fixed residential mortgage rate is now 6.70%. up from 6.66% the previous working day.

Winkworth said: “Interest rates [in Q2] rose higher and faster than anticipated. Mortgage approvals, which in Q1 recovered from the low levels seen in Q4 2022, were reported below the levels seen in the first half of last year. Property prices have held up reasonably well but transactions have slowed, leading to a high number of agreed sales being delayed to the second half of the year.”

Preliminary first half figures show lettings revenue approximately 11% higher and sales revenues down by 20% compared with a year earlier.

The company will pay a dividend of 2.9p per ordinary share for the second quarter.

The firm, which is led by Dominic Agace, expects pre-tax profits for the first half to be below last year’s level of £1.07 million.

It said: “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 of the year remains uncertain.”