UK Homebuilders Rally as Government Announces New Equity-Loan Program

European shares were largely flat on Monday as the gains in British homebuilders were offset by higher oil prices and elevated bond yields. The pan-European STOXX 600 index closed at 638.68, with most major regional indexes subdued.

The UK's FTSE 100 index fell 0.1%, while Spain's IBEX dropped 0.5%. However, British homebuilders such as Persimmon, Barratt Redrow, Taylor Wimpey, and Vistry surged between 10.4% and 14.7% after the government announced a new equity-loan program for first-time buyers.

Kathleen Brooks of XTB said the plan would 'slash the deposit required to 2.5% from 5%, which should help give access to lower income first-time buyers.' She added that this could be the start of a new bull market for UK homebuilders.

However, broader market gains were restrained by rising Brent crude prices and higher bond yields. The European Central Bank has raised interest rates twice this year in response to oil-driven inflation pressures.