Cairn Homes may get boost from mortgage rate cuts

Cairn Homes — the Ireland-focused homebuilder which floated on the stock market last year — could benefit from mortgage rate cuts as it brings more development sites on stream.

The company told its annual shareholders’ meeting yesterday that the four sites were part of its acquisition of the so-called Project Clear loans acquired from Ulster Bank late last year and have the capacity to develop 1,150 new homes in the greater Dublin area.

Darren McKinley, an analyst at Merrion Capital, said the announcement was significant because it had brought more sites closer to completion.

“It is progress in the right direction. They will be more shovel-ready on the ground in the near future,” said Mr McKillen.

However, the shares, which were unchanged yesterday in London, have dropped by over 4% since the start of the year. 

The shares have also underperformed the Irish-based Reit property companies focused on building commercial properties.

Mr McKillen said mortgage rate cuts announced by AIB and KBC on Monday may in time boost Cairn Homes, because it will rely on more people qualifying for mortgage loans under the Central Bank affordability rules to buy its homes. Lower costs of borrowing should make it easier for borrowers to qualify for loans.

That is “very positive” for Cairn, said Mr McKillen.

Davy Stockbrokers said: “The combination of these four sites has the potential to deliver over 1,150 housing units, and the company remains confident of converting 90% of the Project Clear portfolio into its owned land bank by the end of 2016.”


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