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Mortgages - UK - March 2017

Published By :

Mintel

Published Date : Mar 2017

Category :

Banking

No. of Pages : N/A

The mortgage market is in a healthy state but still faces a number of challenges, from the need to increase housing stock, to increasing regulatory requirements and Brexit. Crucially though, consumers have a healthy appetite for mortgages, giving plenty of opportunities to incumbents and challengers alike.

Table of Content

OVERVIEW
What you need to know
Products covered in this Report

EXECUTIVE SUMMARY
The market
Gross mortgage lending reached £245.4 billion in 2016
Figure 1: Forecast of gross mortgage lending, 2011-21
Companies and brands
Lloyds Banking Group is the UK’s biggest mortgage provider
Figure 2: Mortgage market share, by gross new mortgage lending, 2016
Britain’s leading banks carry accusations of being solely profit-driven
Figure 3: Attitudes towards and usage of selected brands, December 2016
The consumer
Consumers are split over how Brexit will affect home buying
Figure 4: Consumer attitudes towards the effects of Brexit on home ownership, December 2016
A third of adults have a mortgage
Figure 5: Mortgage ownership, December 2016
52% of mortgage holders have a fixed-rate loan
Figure 6: Type of mortgage owned, December 2016
28% of mortgages were arranged in the last year
Figure 7: Timing of last mortgage, December 2016
Online is a key site of mortgage research, but people prefer to apply in person
Figure 8: Methods used for/interested in using for researching and arranging a mortgage product, December 2016
Figure 9: Methods used for/interested in using for administering a mortgage product, December 2016
A tenth of non-homeowners plan to buy a property in the next two years
Figure 10: Intentions to buy a property in the next two years, December 2016
A quarter of Millennials anticipate needing to move elsewhere to buy
Figure 11: Renters’ attitudes towards mortgages and home ownership, December 2016
What we think

ISSUES AND INSIGHTS
Fixed-rate loans will grow further in popularity in uncertain times
The facts
The implications
High-quality online channels are essential to stave off disruptors
The facts
The implications
Assistance for first-time buyers must continue post-Help to Buy
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Gross mortgage lending reached £245.4 billion in 2016
First-time buyer numbers increased to 339,000
The intermediary mortgage sector accounts for two thirds of the market
Rates remain appealing to home buyers
Brexit looms over the industry
Buy-to-let takes a hit

MARKET SIZE AND FORECAST
Mortgage lending grew by 11% in 2016…
Figure 12: Gross mortgage lending, not seasonally adjusted, 2012-16
but it was a turbulent ride
Figure 13: Quarterly gross mortgage lending, not seasonally adjusted, 2014-16
Gross mortgage lending is forecast to reach £271 billion in 2021
Figure 14: Forecast of gross mortgage lending, 2011-21
Figure 15: Forecast of gross mortgage lending, at current and constant prices, 2011-21
Forecast methodology

MARKET SEGMENTATION
First-time buyer numbers grew again last year
Figure 16: Volume of new mortgages, by purpose, not seasonally adjusted, 2012-16
Remortgaging continues apace
Figure 17: Value of new mortgages, by purpose, not seasonally adjusted, 2012-16

CHANNELS TO MARKET
Two thirds of new mortgages were sold via intermediaries in 2015/16
Figure 18: Distribution of regulated mortgage sales, direct versus intermediated, 2011/12-2015/16
Figure 19: Distribution of regulated mortgage sales, advised versus non-advised, 2011/12-2015/16
Banks retain role as first port of call for mortgage advice
Figure 20: Sources of mortgage advice used for last mortgage/remortgage, December 2016

MARKET DRIVERS
Price growth was steady in 2016
Figure 21: Annual change in average UK house prices – ONS and Nationwide house price indices, Q1 2009-Q3 2016
Rates remain appealing for borrowers
Figure 22: 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-December 2016
A “broken” housing market
Planning for the right homes in the right places
Building homes faster
Diversifying the market
Helping people now
Figure 23: Number of permanent dwellings started and completed, 2009/10-2015/16
Approvals fell in the immediate aftermath of the EU referendum…
Figure 24: Monthly mortgage approvals, by purpose of loan, not seasonally adjusted, 2016
and Brexit has the potential for further impact
REGULATORY AND LEGISLATIVE CHANGES
The Mortgage Credit Directive came into effect in 2016…
while more regulation could be on the way
Regulatory changes dampen the appeal of buy-to-let
The end of the Help to Buy Mortgage Guarantee…
Figure 25: Monthly volumes and value of mortgages completed using the Help to Buy Mortgage Guarantee scheme, and value of Help to Buy Guarantees provided, October 2013-September 2016
but first-time buyers get a boost from the Lifetime ISA

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Lloyds Banking Group is the UK’s biggest mortgage provider
Digital innovations offer a new route to market for challengers
Britain’s leading banks carry accusations of being solely profit-driven

MARKET SHARE
Lloyds Banking Group leads a congested market
Figure 26: Selected mortgage providers, market share by gross new mortgage lending, 2014-16

COMPANY PROFILES
Lloyds Banking Group
Profile
Recent performance
Recent activity
Nationwide Building Society
Profile
Recent performance
Recent activity
Santander
Profile
Recent performance
Recent activity
Royal Bank of Scotland
Profile
Recent performance
Recent activity
Barclays
Profile
Recent performance
Recent activity
HSBC
Profile
Recent performance
Recent activity

INNOVATIONS AND LAUNCHES
Digital innovations offer a new route to market for challengers
High-LTV lending is back

ADVERTISING AND MARKETING ACTIVITY
Adspend on mortgages remained fairly level in 2016
Figure 27: Total above-the-line, online display and direct mail advertising expenditure on mortgages, 2012-16
TV now makes up over half of mortgage adspend
Figure 28: Total above-the-line, online display and direct mail advertising expenditure on mortgages, by media type, 2015-16
HSBC is the biggest advertiser in the mortgage market
Figure 29: Top 10 advertisers for above-the-line, online display and direct mail advertising expenditure on mortgages, 2012-16
Nielsen Ad Intel coverage

BRAND RESEARCH
What you need to know
Brand map
Post Office and Nationwide are seen as trustworthy and different, followed by Santander and Halifax
Figure 30: Attitudes towards and usage of selected brands, December 2016
Key brand metrics
Consumers are most likely to recommend Nationwide
Figure 31: Key metrics for selected brands, December 2016
Brand attitudes: High street brands have a reputational advantage
Figure 32: Attitudes, by brand, December 2016
Brand personality: Halifax is considered fun and engaging
Figure 33: Brand personality – Macro image, December 2016
HSBC and Barclays are most likely to be labelled as profiteering
Figure 34: Brand personality – Micro image, December 2016
Brand analysis
Post Office enjoys the same positive perceptions as building societies
TSB and Halifax are reliable and accessible
HSBC and Barclays can be relied upon, but are profit-focused
Tesco Bank and The Co-operative Bank: Challengers struggling to stand out

THE CONSUMER – WHAT YOU NEED TO KNOW
Consumers are split over how Brexit will affect home buying
A third of adults have a mortgage
Online is key for mortgage research, but people prefer to apply in person
A tenth of non-homeowners plan to buy a property in the next two years
A quarter of Millennials anticipate needing to move elsewhere to buy

EFFECTS OF BREXIT
Consumers are split over how Brexit will affect home buying
Figure 35: Consumer attitudes towards the effects of Brexit on home ownership, December 2016
48% think that Brexit will negatively impact the cost of living
Figure 36: Consumer attitudes towards the effects of Brexit on the economy and personal finances, December 2016
Mortgage holders are more optimistic about Brexit
Figure 37: Consumer attitudes towards the effects of Brexit on the availability of mortgages, by mortgage ownership, December 2016

MORTGAGE OWNERSHIP
A third of adults have a mortgage
Figure 38: Mortgage ownership, December 2016
Single consumers find it much harder to get on the property ladder
Figure 39: Mortgage ownership, by marital status, December 2016
28% of consumers rent their own home
Figure 40: Rental activity, December 2016

TYPE OF MORTGAGE OWNED
Fixed-rate deals are the most popular mortgages
Figure 41: Type of mortgage owned, December 2016
Younger consumers are more likely to have a fixed-rate mortgage
Figure 42: Type of mortgage owned, by age, December 2016

TIMING OF LAST MORTGAGE PURCHASE
28% of mortgages were arranged in the last year…
Figure 43: Timing of last mortgage, December 2016
and three quarters of those took fixed-rate deals
Figure 44: When mortgage was arranged, by type of mortgage held, December 2016

METHODS USED FOR MORTGAGE-RELATED ACTIVITIES
Online is key for mortgage research, but people prefer to apply in person
Figure 45: Methods used for/interested in using for researching and arranging a mortgage product, December 2016
Branch services are still valued for making substantial amendments to mortgages
Figure 46: Methods used for/interested in using for administering a mortgage product, December 2016
Telephone services offer vital contact for inexperienced borrowers
Figure 47: Use/interest in using telephone services for mortgage-related activities, by generation, December 2016

HOME BUYING PLANS
A tenth of non-homeowners plan to buy a property in the next two years
Figure 48: Intentions to buy a property in the next two years, December 2016
Millennials are the most aspiring potential home buyers
Figure 49: Intentions to buy a property in the next two years, by generation, December 2016
High-LTV loans likely to be in high demand
Figure 50: Intentions to buy a property in the next two years, by value of savings and investments, December 2016

RENTERS’ ATTITUDES TOWARDS MORTGAGES AND HOME OWNERSHIP
22% of renters think lenders make it too hard to get a mortgage
Figure 51: Renters’ attitudes towards mortgages and home ownership, December 2016
One in six renters are currently saving for a deposit…
while 19% of under-35s are planning to use a Help to Buy or Lifetime ISA
Older renters are most likely to be happy about their situation
Figure 52: Agreement with the statement “I would prefer to rent than own my own home”, by age, December 2016
A quarter of Millennials anticipate needing to move elsewhere to buy
Figure 53: Agreement with the statement “I think I will need to move somewhere else to be able to afford to buy a property”, by generation, December 2016

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

APPENDIX – MARKET SIZE AND FORECAST
Figure 54: Best- and worst-case forecast of gross mortgage lending, 2016-21
Forecast Methodology

List of Table

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