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Mortgage Advice - UK - April 2017

Published By :

Mintel

Published Date : Apr 2017

Category :

Insurance

No. of Pages : N/A

The mortgage advice market is in a strong position. The MMR means that those looking for a mortgage almost always need to take advice, while the strong demand for mortgages means this captive audience is regularly replenished. However, digital innovation, from both major lenders and disruptive start-ups threaten to put a squeeze on traditional advisers who lack the funds and expertise to compete online.

Table of Content

OVERVIEW
What you need to know

EXECUTIVE SUMMARY
The market
Mortgage advice accounts for almost all new mortgages
Figure 1: Distribution of regulated mortgage sales, advised versus non-advised, 2011/12-2015/16
Gross mortgage lending is forecast to grow to £271 billion by 2021
Figure 2: Forecast of gross mortgage lending, 2011-21
The consumer
34% of adults have a mortgage
Figure 3: Mortgage ownership, December 2016
Banks still regarded as first port of call for mortgage advice
Figure 4: Main source of advice for most recent mortgage, December 2016
92% were satisfied with their most recent experience with an adviser
Figure 5: Satisfaction with last mortgage advice received, December 2016
Cost is key to choosing an adviser
Figure 6: Important factors when choosing a mortgage advice provider, December 2016
Preference for face-to-face advice could hold back online innovations
Figure 7: Attitudes towards mortgage advice, December 2016
A significant minority are unconvinced about the benefits of advice
Figure 8: Attitudes towards mortgage advice, December 2016
What we think

ISSUES AND INSIGHTS
Consumers need to be shown the benefits of advice
The facts
The implications
Automation has a long way to go
The facts
The implications
Transparent pricing is key to improving perception
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Mortgage advice accounts for almost all new mortgages
Gross mortgage lending is forecast to grow to £271 billion by 2021
Low rates continue to boost the market

THE MORTGAGE ADVICE MARKET
Mortgage advice covers 97% of the mortgage market…
Figure 9: Distribution of regulated mortgage sales, advised versus non-advised, 2011/12-2015/16
and grew by 11% in 2015/16
Figure 10: Number of regulated mortgage sales, advised versus non-advised, 2013/14-2015-16
Two thirds of mortgages are sold via intermediaries
Figure 11: Distribution of regulated mortgage sales, direct versus intermediary, 2011/12-2015/16
Figure 12: Number of regulated mortgage sales, direct versus intermediary, 2013/14-2015/16

THE MORTGAGE MARKET
Gross new mortgage lending totalled £245 billion in 2016…
Figure 13: Gross mortgage lending, not seasonally adjusted, 2012-16
but growth is expected to slow in the next five years
Figure 14: Forecast of gross mortgage lending, 2011-21
Buy-to-let is due to fall in appeal
Figure 15: Forecast of new buy-to-let mortgage advances, 2011-21
Lloyds Banking Group is the UK’s mortgage market leader
Figure 16: Selected mortgage providers, market share by gross new mortgage lending, 2016

MARKET DRIVERS
The housing market has calmed in the last two years
Figure 17: Annual change in average UK house prices – ONS and Nationwide house price indices, Q1 2009-Q4 2016
Low rates boost demand for remortgaging
Figure 18: Monthly interest rate of UK monetary financial institutions (excluding Central Bank) for 2-year fixed-rate mortgage at 75% LTV, 2-year variable-rate mortgage at 75% LTV and standard variable-rate (SVR) mortgage, January 2011-February 2017
FCA launches market study to assess competition in the mortgage market

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Lenders are strengthening their ties to intermediaries…
while automation is allowing new challengers to enter the market

COMPETITIVE STRATEGIES
Major lenders look to increase intermediary presence…
and make it easier for consumers to find them
Automation offers new challengers a route to market
Retention proc fees introduced across the market

THE CONSUMER – WHAT YOU NEED TO KNOW
34% of adults have a mortgage
Most used a bank or building society to get their last mortgage advice
92% were satisfied with their most recent experience with an adviser
Cost is key to choosing an adviser
Preference for face-to-face advice could hold back online innovations
A significant minority are unconvinced about the benefits of advice

MORTGAGE OWNERSHIP
A third of British adults have a mortgage on their main home…
Figure 19: Mortgage ownership, December 2016
and 10% of non-mortgage holders plan to get one in the next two years
Figure 20: Intentions to buy a property in the next two years, December 2016

MAIN SOURCE OF MORTGAGE ADVICE
Two fifths of mortgage holders took advice from their main bank
Figure 21: Main source of advice for most recent mortgage, December 2016
Suburban and rural groups are more likely to use independent advice
Figure 22: Main source of advice for most recent mortgage, by residential area, December 2016

SATISFACTION WITH MORTGAGE ADVICE
Mortgage advisers achieve impressive satisfaction levels
Figure 23: Satisfaction with last mortgage advice received, December 2016
Bank advisers are most likely to provide very satisfactory service…
Figure 24: Satisfaction with last mortgage advice received, by main source of advice for most recent mortgage, December 2016
helped by their branch networks
Figure 25: Satisfaction with last mortgage advice received, by methods used for/interested in using for seeking advice on the most appropriate mortgage, December 2016
Better-off consumers are also more satisfied with their mortgage adviser
Figure 26: Satisfaction with last mortgage advice received, by current financial situation, December 2016

FACTORS AFFECTING CHOICE OF MORTGAGE ADVISER
Cost is the key factor in choosing an adviser
Figure 27: Important factors when choosing a mortgage advice provider, December 2016
Online channels are in low demand at present
Figure 28: Important channel-related factors when choosing a mortgage advice provider, by age, December 2016
Recommendations are particularly important for new applicants
Figure 29: Important factors when choosing a mortgage advice provider, by mortgage ownership, December 2016
Speed of service is more important for bank advice users
Figure 30: Agreement that “How quickly I can get an appointment” is an important factor when choosing a mortgage advice provider, by main source of advice for most recent mortgage, December 2016

ATTITUDES TOWARDS MORTGAGE ADVICE CHANNELS
Two thirds would only pay for face-to-face advice…
Figure 31: Attitudes towards mortgage advice, December 2016
but nearly half are interested in digital advice
Figure 32: Interest in receiving mortgage advice via digital channels, by age, December 2016

ATTITUDES TOWARDS MORTGAGE ADVICE
Aggregators are a threat to mortgage advice
Figure 33: Attitudes towards mortgage advice, December 2016
Independent advisers carry a greater sense of authority
Figure 34: Confidence in getting the best mortgage deal without professional advice, by main source of advice for most recent mortgage, December 2016
Millennials are most likely to consider advice good value for money
Figure 35: Agreement with the statement “I think mortgage advisers provide good value for money”, by generation, December 2016
Young city-dwellers are most concerned about applying directly
Figure 36: Attitudes towards mortgage advice – CHAID – Tree output, December 2016

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID Methodology
Figure 37: Attitudes towards mortgage advice – CHAID – Table output, December 2016

List of Table

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