Luthman hails ‘golden opportunity’ from mortgage scheme

Liontrust’s Jan Luthman and Stephen Bailey have added two property stocks and a comparison website to their portfolios in a move aimed at benefiting from government stimulus for the mortgage market.

Mr Luthman and Mr Bailey, who run the £324m Liontrust Macro Equity Income and £93m Liontrust Macro UK Growth funds, have bought into commercial mortgage provider Paragon Group, comparison website and Aim-listed property developer Telford Homes.

Mr Luthman said the moves were driven by the government’s mortgage guarantee scheme, aimed at improving the availability of mortages. Under the scheme, buyers of new or existing homes will be able to access mortages with deposits of as little as 5 per cent, while the government will protect lenders against losses of as much as 15 per cent of the loan’s value.

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“In our view, the terms of the mortgage guarantee scheme could open up significant opportunities for so-called ‘challenger’ banks to carve out rapidly growing niches within the retail mortgage market at the expense of larger incumbents,” the manager said, highlighting Paragon Group as an example of “challenger”.

Mr Luthman said he had bought into “on the premise that, in a gold rush, the man who makes a fortune is the man who sells the shovels”.

He added: “Telford Homes is another component of our thematic exposure and a more obvious beneficiary of the scheme’s ostensible aim to improve affordability for first-time buyers. It is focused on London and should benefit from both the capital’s unique demographic pressures and the support provided by the mortgage guarantee scheme.”

In the five years to July 15 the Liontrust Macro UK Growth fund gained 52.6 per cent, compared with the IMA UK All Companies sector average gain of 58.7 per cent. The Liontrust Macro Equity Income fund posted a 66.5 per cent return in the same period, compared with the IMA UK Equity Income sector’s 62.9 per cent average gain.