There’s always room for another income stock in my SIPP, so have I just found one? The yield and valution look irresistible, but as ever when picking stocks, it pays to look a little deeper.
The company in question is OSB Group (LSE: OSB), a specialist mortgage lender listed on the FTSE 250. It’s made up of two segments. The first is OneSavings Bank, which focuses on buy-to-let, residential development and commercial property lending. The second is Charter Court, which owns brands such as Kent Reliance, InterBay and Precise Mortgages. So it’s not your standard high street bank.
Why are the shares so cheap?
It’s a pretty sizeable operation, with a market cap of £1.76bn. But here’s the exciting bit. Today, it has a brilliant trailing yield of 6.59%. And it combines that with a low price-to-earnings ratio of 6.75.
For me, that’s almost the perfect combination. It allows me to get in at a bargain price, and lock into a high rate of income. Of course, investing is never that simple. There’s a reason why OSB is cheap today, and you’ve probably guessed it.
The shares have had a bumpy year, falling 20% so far in 2026. Over five years they’re up just 9%. So what went wrong?
The OSB share price spiked in the final months of 2025, as investors priced in a string of interest rate cuts as inflation looked set to retreat. This was expected to revive the housing market, and unleash a fresh wave of mortgage demand.
You know what happened next. The Iran war and oil price spike completely reversed those expectations, and knocked the shares back.
But it wasn’t all down to the Middle East. Full-year results (5 March) revealed that profits dropped by 8.5% in 2025, due to an impairment charge, higher admin costs and fair value losses. Return on tangible equity slipped from 14.9% to 13.7%.
The board cheered investors with a £100m share buyback, and by hiking the dividend 5% to 35.3p per share. But it wasn’t enough.
Is now a good time to buy this FTSE 250 stock?
On 30 April the board hailed its “resilient” performance so far this year, with both the net loan book and retail deposits both rising. Naturally, it’s worried about the geopolitical situation.
I’m also worried about the impact of the Renters’ Rights Bill on the buy-to-let market, which is said to have sparked an exodus of landlords. That could hit OSB’s specialist BTL lending platform, Rely, launched only last year.
Even if we do get some kind of Iran deal, the inflation risk and uncertainty is likely to linger for some time. I think OSB is worth considering with a minimum five-year view, but it’s likely to remain bumpy in the shorter run. At least investors will get a handsome rate of income while they wait. I’ll be keeping a close eye on OSB, because it has the potential to make a storming recovery when conditions improve.
Should you invest £5,000 in OSB Group right now?
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Harvey Jones does not hold any positions in the companies mentioned.
