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Mortgages - Intermediary Focus - UK - November 2014

Published By :

Mintel

Published Date : Nov 2014

Category :

Banking

No. of Pages : 76 Pages

Although non-advised sales will now be uncommon, the threat that lenders will try to cut intermediaries out of the sales process remains. This is naturally something that the mortgage advisor community will need to keep an eye on and continue to seek ways in which they can offer added value that cannot be replicated by lender-based advisors.
Table of Content

Introduction

Abbreviations

Executive Summary

The Market
Intermediaries gaining a larger share of regulated mortgage sales
Figure 1: Proportional distribution of regulated mortgage sales, by channel, 2008/09-2013/14
Market factors
MMR now officially in force
Advised sales set to increase further
Number of intermediary mortgage products is on the rise
Figure 2: Average number of mortgage products available, by type, August 2009 to August 2014
Consumer confidence levelling off after reaching its highest level in five years
Help to Buy set to continue but Funding for Lending has been withdrawn
Companies and key players
Decline in the number of authorised mortgage business firms has slowed
Figure 3: Number of UK authorised mortgage business firms (non-deposit taker), 2008-14* and 31 July 2014
Advertising to mortgage intermediaries has fallen sharply in 2014
The adviser
Prime residential property the primary driver of mortgage business
Figure 4: Anticipated sources of mortgage business over the next three months, by advisers as a group, August 2014
Increase in home purchase loans predicted to drive income growth
Figure 5: Main reasons for an expected increase in income over the next three months, August 2014
Intermediaries view regulation as their biggest issue
Figure 6: The biggest challenges facing mortgage intermediaries, August 2014
Current views of the MMR tend to be negative
Figure 7: Agreement with statements about the impact of the Mortgage Market Review, August 2014
Lenders are not generally viewed in a favourable light
Figure 8: Level of agreement with statements about mortgage lenders, August 2014
What we think

Issues and Insights

The MMR is a short-term headache not a long-term problem
The facts
The implications
Non-advised sales fading, but lenders will still seek ways to sell direct
The facts
The implications
Buy-to-let provides a hedge against a potential slowdown in FTB activity
The facts
The implications

Trend Application

Twitter can help put lenders and advisers in sync
Advice back in fashion under the MMR
In uncertainty is opportunity

Market Drivers – Broader Market Factors

Key points
Consumer confidence at a five year high
Figure 9: GfK NOP Consumer Confidence Index, January 2008-October 2014
Property prices have risen throughout 2013 and into 2014
Figure 10: Annual house price growth in the UK – comparison of four different sources, Q1 2008-Q2 2014
Interest rates remain low but the next move will be upwards
Figure 11: Bank of England base rate, three-month (monthly average) LIBOR and new mortgage effective rate, January 2007-September 2014
Mortgage approvals starting to flatten out after a nice rise in 2013
Figure 12: Number of yearly mortgage approvals (seasonally adjusted), by type, 2008-Q3 2014
Repossessions and arrears continue their descent
Figure 13: Mortgage arrears and repossessions, Q1 2010-Q2 2014
Buy-to-let lending moves into parity with the overall market in 2013
Figure 14: Annual percentage change in gross advances – buy-to-let versus total mortgage market, 2003-13

Market Drivers – Internal Market Factors

Key points
MMR regulation now in effect
Affordability assessment:
Removal of the non-advised sales process:
Implementation growing pains are short-term in nature
Number of direct and intermediary mortgage products continues to grow
Figure 15: Average number of mortgage products available, by type, August 2009 to August 2014
Nearly eight in 10 sales are advised
Figure 16: Distribution of regulated mortgage sales, advised versus non-advised, 2008/09-2013/14
A large proportion of customers are comfortable arranging loans online
Figure 17: Preferred methods of mortgage arrangement, December 2013
Help to Buy has helped stimulate mortgage lending activity
Funding for Lending Scheme no longer available to mortgage lenders
EU Mortgage Credit Directive compliance on the horizon
Who’s Innovating?

Key points
Intelliflo introduces guide to help reduce MMR confusion
Lenders and advisers can now communicate in real-time
vScreen enabling remote face-to-face advice
AdviserPost allows advisers to outsource their social media activity
Sesame Bankhall introduces automated online tracking system

Lending Market Overview

Key points
Gross mortgage lending breaks out of slump 2013
Figure 18: Total secured lending, by gross and net advances (not seasonally adjusted), 2007-13
Rise in all types of mortgage lending in 2013
Figure 19: Gross mortgage lending, by type of loan, 2006-13
First-time buyers account for over two fifths of house purchase volume
Figure 20: Loans advanced for house purchase, by type of borrower, 2006-13
Strong growth in new buy-to-let advances
Figure 21: Volume and value of new buy-to-let mortgages, 2007-13

Intermediary Share of the Mortgage Market

Key points
Intermediaries grabbing a large share of regulated mortgage sales
Figure 22: Proportional distribution of regulated mortgage sales, by channel, 2008/09-2013/14

Mortgage Intermediary Marketplace

Key points
Decline in the number of authorised mortgage business firms has stalled
Figure 23: Number of UK authorised mortgage business firms (non-deposit taker), 2008-14* and 31 July 2014
The MMR improves the appeal of the mortgage advice business
Figure 24: Adviser numbers, estimated 2012 and actual December 2012, July 2013 and January 2014

Company Profiles

Intrinsic Financial Services
Company background
Number of advisers/members
Key business/financial indicators
Figure 25: Key financial data for Intrinsic Financial Services, 2012 and 2013
Recent activity
Legal & General
Company background
Number of advisers/members
Key business/financial indicators
Figure 26: Key financial data for Legal & General (housing and protection business segment), 2012 and 2013
Recent activity
Openwork
Company background
Number of advisers/members
Key business/financial indicators
Figure 27: Key financial data for Openwork, 2012 and 2013
Recent activity
Personal Touch Financial Services
Company background
Number of advisers/members
Key business/financial indicators
Figure 28: Key financial data for Personal Touch Financial Services, 2012 and 2013
Recent activity
Sesame Bankhall
Company background
Number of advisers/members
Key business/financial indicators
Figure 29: Key financial data for Friends Life Group Limited UK operating segment*, 2012 and 2013
Recent activity
Tenet
Company background
Number of advisers/members
Key business/financial indicators
Figure 30: Key financial data for Tenet Group, 2012 and 2013
Recent activity

Brand Communication and Promotion

Key points
Advertising to mortgage intermediaries declines sharply in 2014
Figure 31: Amount spent on advertising in the mortgage intermediary sector, year to September 2010-14
Top 10 advertisers in the mortgage intermediary market
Figure 32: Top 10 advertisers in the mortgage intermediary market, year to September 2012-14
More than 90% of advertising done via the press in 2014
Figure 33: Advertising channels in the mortgage intermediary sector, year to September 2012-14

The Adviser – Mortgage Business Outlook

Key points
Prime residential property the chief driver of mortgage business
Figure 34: Anticipated sources of mortgage business over the next three months, by advisers as a group, August 2014
One in four say prime residential drives 90% to 100% of business
Figure 35: Proportion of mortgage business that will be driven by prime residential over the next three months, August 2014
Just less than a third derive 30% or more of business from buy-to-let
Figure 36: Proportion of mortgage business that will be driven by buy-to-let over the next three months, August 2014
Increase in home purchase loans seen as key driver of income growth
Figure 37: Main reasons for an expected increase in income over the next three months, August 2014

The Adviser – Key Challenges

Key points
Dealing with regulation viewed as the biggest issue for advisers
Figure 38: The biggest challenges facing mortgage intermediaries, August 2014
High property prices hindering FTB activity still seen as a key challenge
Direct and online channels now perceived as less of a threat

The Adviser – Impact of the MMR

Key points
MMR affordability assessment requirements are slowing down advisers
Figure 39: Agreement with statements about the impact of the Mortgage Market Review, August 2014
More clarity about the interpretation of the new rules needed
Nearly a third believe media coverage is scaring off potential business

The Adviser – Relationship with Mortgage Lenders

Key points
Scope for improvement in adviser-lending relations
Figure 40: Level of agreement with statements about mortgage lenders, August 2014
Role of advisers may not be adequately appreciated
The MMR may allow for more synergies

Appendix – Adviser Regulatory Definitions

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