The government's decision to extend the Help to Buy scheme for newly-built homes until 2020 has triggered a new rally in housebuilding stocks. Persimmon (PSN), Bovis Homes (BVS) and Taylor Wimpey (TW.) are the biggest risers among the FTSE large caps as investors like the idea that there will be prolonged financial assistance to buy new-build properties.
The Help to Buy scheme was originally going to end in 2016. Chancellor George Osborne says the four-year extension will help finance the building of 120,000 extra houses.
The scheme enables individuals to purchase a home with as little as 5% deposit. The government provides a loan for up to 20% of the price and the individual then needs to get a a mortgage for up to 75% to cover the outstanding amount.
Individuals don't get charged any fees on the government loan for the first five years of owning the house. After that, the fee starts at 1.75% of the loan's value and rises every year thereafter.
These are the biggest movers among housebuilding equities:
Persimmon +5.9% to £13.90
Bovis Homes +5% to 898p
Taylor Wimpey +4.4% to 120.9p
Bellway +3.9% to £16.05
Barratt Developments +3.9% to 428.2p
The news also drives up shares in companies that provide products or services to the housebuilding sector, principally builders' merchants and DIY chains:
Grafton +1.8% to 656.5p
Home Retail +1.3% to 211.1p
Wolseley +1.2% to £33.80
Travis Perkins +1.1% to £18.71
Hodwen Joinery +0.6% to 376.6p