Mortgage lender warns on profits
The sub-prime mortgage troubles that have recently beset US lenders could be beginning to be felt in the UK. Kensington Group (LSE: KIRAX), which specializes in providing mortgages to customers in the UK and Ireland whose credit ratings are below average warned that it cannot provide estimates of how much profit it expects to make this year and that profits in the years to come will probably not reach current expectations, which were already lowered in a warning issued last month.
Kensington said on Wednesday that the value of the mortgages on its books was down to £6.9 billion by the end of February even though new business volume was up by 4 percent in the past quarter compared with the same time last year. It also said that 9.4 percent of the accounts it carries currently are 90 days or more overdue. This arrears rate is lower than last year at the same time but up from the last quarter of last year.
The mortgage provider said last month that it has been having discussions with several possible buyers for the business, but in today’s warning it said that these conversations are still in the early stages. The warning sent Kensington’s shares 24p lower in mid-morning trade to 607p, down from the 900p per share it was trading at last November.