Persimmon sees government intervention

By Marc Roca

LONDON (Reuters) - Housebuilder Persimmon (PSN.L) reported a sharp fall in first-half profits due to low mortgage availability and expressed confidence that the government would intervene, boosting its shares over 11 percent.

"We are pleased that the government has confirmed it is considering various alternatives for assisting the housing market, particularly with respect to improving mortgage availability," Chief Executive Mike Farley said in an interview.

"Mortgage availability is still the key factor driving down the housing market so we hope it assists in this front, sooner rather than later," he said.

The Council of Mortgage Lenders yesterday said mortgages for home buyers were around 50 percent down year-on-year, as the credit crunch continues to bite, while the Royal Institution of Chartered Surveyors last week warned that sales per surveyor were the weakest since records began in 1978.

Shares in the company, which peaked at 1,544 pence in January 2007, were up 11.22 percent at 332 pence at 11:07 a.m.

"Banks and building societies are unable to securitise their loans, so if the government underwrites them it will free up mortgages, stimulating the market," Farley said. "That's the number one priority because it's what is putting us here in the first place, but any other help to first-time buyers on stamp duty would also help sentiment."

Persimmon reported a 64 percent fall in first-half pretax profit on Thursday and said it was cutting its dividend due to very difficult trading conditions and an uncertain outlook.

It said home sales were down 31 percent year-on-year as buyers found it much harder to get mortgages, but that sales volumes since April had not deteriorated any further and cancellation rates were lower.