The Lloyds share price has struggled in the past few sessions as traders reflect on the UK housing sector. The stock ended the week at 48.93p, which was about 3% below the year-to-date high of 50.75p. It has climbed by more than 43% this year alone.
What happened: The Lloyds share price has jumped this year as investors reflect on the strong housing sector in the UK. Recent data have shown that the number of houses sold in the country has kept rising, especially in London.
This demand has been accompanied by a surge in house prices. This has been good news to Lloyds Bank, which is the biggest mortgage lender in the UK. Perhaps, the shares have eased as investors price in a slowdown of the housing sector as the government support plans end.
On the positive side, the positive economic data from the UK means that the Bank of England (BOE) will likely start a new phase of tightening earlier than expected. High interest rates tend to be positive for banks because they lead to better margins.
Meanwhile, analysts are still bullish on Lloyds share price. In a recent note, analysts at Credit Suisse said the bank was its top pick among all UK banks. The report said:
“BOE data released for April show new business mortgage margins came down further and are now 11bp above the stock (; however, 2Y fixed-rate mortgages are more meaningfully above the stock. Our price tracker shows that over May application margins came down by a further 7bp we think.”
A few months ago, I predicted that the Lloyds share price would soon surge to 50p. This prediction was right as the stock rose above 50p on May 28. Since then, the stock has retreated slightly. This was expected since the stock crossed a major level of resistance. Still, the stock remained between the ascending channel that is shown in red. Therefore, in my view, the shares will keep rising as bulls target the YTD high of 50.53p.
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