Moneysupermarket.com Expresses Concern as Mortgages Slump

Concerns about inactivity in the mortgage market have hit the balance sheets of Moneysupermaket.com. First time buyers are reluctant to spend their hard earned money and banks are reluctant to lend home loans to them, which is the reason the mortgage markets are being badly hurt this month. Mortgage rates are on the increase and more and more low deposit deals are being taken off the market.

The knock on effect has thrown Moneysupermarket’s mortgage performance into question and investors have been asking if everything is alright with the young online price comparison empire. The answer seems to be yes, but we’re still a little wobbly.

According to the Times Online, the website: “had changed its performance expectations this year despite admitting to “extremely challenging” conditions in its mortgage business,” and in many areas the website was performing very well with growth in credit cards and savings amongst other smaller divisions.  It was suggested that this growth would make up for the losses incurred by the mortgage sector of the company.

The chief executive of Moneysupermaket.com Simon Nixon commented that the second quarter of the year was worse and that the first half of the year was substantially stronger, he attributed this to a new business strategy which he calls the diversified business model.

Speaking to The Times he said: “The problems in the UK loan and mortgage markets are well documented and have naturally impacted our activities in that area. Nevertheless, that we expect to end the first half of the year broadly in line with our targets and with overall revenue growth in excess of 25 per cent shows the underlying strength of our diversified business model.”

Experts have predicted at least £60 million pounds of profit for the company which is much less than was initially predicted. The company was expected to make £100 million, year on year based on predictions from this year’s first quarter.

Share prices have also taken a battering since the company first floated on the stock market in summer last year. Company shares fell by 8.4 %. That’s a drop of 10 pence to £109 pence in the opening hours of trading.  Moneysupermarket.com had an optimistic opening price of £170 last year, so that means their share price has fallen over the last 12 months by 30%. Investors have had their fears settled for now though, because the growth in other areas seems to indicate that Moneysupermaket’s strength lies in its variety.

The price comparison giant is experiencing strong and persistent growth in its travel departments, and other sectors are developing healthily. The travel sector alone was up by 45% in the second quarter and 50% in the first quarter. While, the home services division also saw growth which helped to stabilize the losses the company faced with the massive mortgage mess.

In home services there was a whopping increase of 75% for the whole first half of 2008, though these figures are still marginally less than the 100% increases which these departments saw during the business’s first three months in flotation.