Table of Contents
Executive Summary
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- The market
- Gross mortgage lending rises 3.4% in 2018
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- Figure 1: Forecast of gross mortgage lending, 2013-23
- Most new mortgages distributed via intermediaries
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- Figure 2: Distribution of regulated mortgage sales, direct versus intermediated, 2013/14-2017/18
- Housing price growth has stalled, but rates remain attractive
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- Figure 3: Monthly interest rate of UK monetary financial institutions (excluding Central Bank) for 2-year and 5-year fixed-rate mortgages at 75% LTV, 2-year variable-rate mortgage at 75% and standard variable-rate (SVR) mortgage, January 2013-January 2019
- FCA publishes final report calling for better customer support
- Companies and brands
- Lloyds Banking Group the top mortgage lender
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- Figure 4: Top 10 UK mortgage providers, by outstanding mortgage balances at year-end, 2018
- Adspend rebounds in 2018
- Big banks respected but not always admired, while supermarkets struggle for recognition
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- Figure 5: Attitudes towards and usage of selected brands, November 2018
- The consumer
- Three fifths of mortgage owners are on a fixed-rate deal
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- Figure 6: Type of mortgage held, January 2019
- Half of borrowers with fixed-term deals say they will expire within 2 years
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- Figure 7: Projected expiration of current mortgage deal, January 2019
- Most plan to seek out new deals upon expiration
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- Figure 8: Action likely to be taken upon expiration of current mortgage deal, January 2019
- Half of borrowers express some concern about the impact of an interest rate rise
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- Figure 9: Level of concern about impact of interest rate rises on mortgage affordability, January 2019
- Most borrowers have a good idea of how much they owe
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- Figure 10: Agreement with select statements about current mortgage, January 2019
- Buying a home is a priority for one third of renters
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- Figure 11: Attitudes and behaviour toward homeownership among renters, January 2019
- What we think
Issues and Insights
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- Fear of rejection may be hurting demand for mortgages
- The facts
- The implications
- Automation is the key to creating a more competitive market
- The facts
- The implications
The Market – What You Need to Know
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- Gross lending grew by 3% in 2018
- Remortgaging activity supporting market growth
- Intermediaries further grow their share of new mortgage distribution
- Housing price growth has stalled, but rates remain attractive
- FCA publishes final report calling for improved customer support
Market Size and Forecast
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- Gross lending grew by 3% in 2018
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- Figure 12: Gross mortgage lending, 2014-18
- Market forecast
- Gross lending projected to reach £342 billion by 2023
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- Figure 13: Forecast of gross mortgage lending, 2013-23
- Figure 14: Forecast of gross mortgage lending, at current and constant prices, 2013-23
- Forecast methodology
Market Segmentation
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- Home purchase activity stagnates
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- Figure 15: Volume of new mortgages, by purpose, not seasonally adjusted, 2014-18
- Remortgaging supporting growth in market value
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- Figure 16: Value of new mortgages, by purpose, not seasonally adjusted, 2014-18
Channels to Market
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- 71% of new mortgage sales are intermediated
- Direct sales could increase with new technology
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- Figure 17: Distribution of regulated mortgage sales, direct versus intermediated, 2013/14-2017/18
- Figure 18: Distribution of regulated mortgage sales, advised versus non-advised, 2013/14-2017/18
Market Drivers
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- House price growth falls to a 6-year low
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- Figure 19: Annual change in average UK house prices – ONS and Nationwide house price indices, January 2011-December 2018
- Interest rates remain attractive
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- Figure 20: Monthly interest rate of UK monetary financial institutions (excluding Central Bank) for 2-year and 5-year fixed-rate mortgages at 75% LTV, 2-year variable-rate mortgage at 75% and standard variable-rate (SVR) mortgage, January 2013-January 2019
- Rates have become more attractive for higher-LTV borrowers
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- Figure 21: Monthly interest rate of UK monetary financial institutions (excluding Central Bank) for 2-year and 5-year fixed-rate mortgages at 95% LTV, January 2014-January 2019
- Building activity is up but still short of what is needed
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- Figure 22: Number of permanent dwellings started and completed, 2006/07-2017/18
Regulatory and Legislative Changes
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- FCA publishes mortgages market study final report
- Consumers need more effective support when choosing a mortgage
- Proposed remedies aim to make shopping around and switching easier
- FCA publishes “mortgage prisoner” consultation paper
- First-time buyer stamp duty relief extended to shared ownership property
Companies and Brands – What You Need to Know
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- Lloyds Banking Group the top mortgage lender
- Lenders keeping rates competitive and catering to FTBs
- Adspend bounces back in 2018
- Big banks respected but not always admired
Market Share
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- Lloyds Banking Group is the UK’s largest lender
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- Figure 23: Top 10 UK mortgage providers, by outstanding mortgage balances at year-end, 2016-18
- Large banking groups and Nationwide maintain market dominance
- Coventry sees strong growth while TSB falters
Competitive Strategies
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- Lenders keeping rates competitive
- More first-time buyer friendly products being launched
- Lenders starting to integrate open banking into the application process
- Mortgage products with higher age limits on the rise
Advertising and Marketing Activity
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- Above-the-line adspend rebounds in 2018…
- …driven by brand building activity
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- Figure 24: Total above-the line, online display and direct mail advertising expenditure on mortgages, excluding equity release, year to November 30, 2016-18*
- Amount spent on digital ads doubles to over £8 million in 2018
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- Figure 25: Total above-the-line, online display and direct mail advertising expenditure on mortgages, excluding equity release, by media type, Year to November 30, 2016-18**
- Halifax fortifies its position as the leading advertiser of mortgages
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- Figure 26: Top 10 advertisers of above-the-line, online display and direct mail advertising expenditure on mortgages, excluding equity release, year to November 30, 2016-18
- Online brokers Habito and Trussle launch brand building campaigns
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
- Post office and Nationwide score high for trust
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- Figure 27: Attitudes towards and usage of selected brands, November 2018
- Key brand metrics
- Nationwide is most likely to recommended
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- Figure 28: Key metrics for selected brands, November 2018
- Brand attitudes: Supermarket brands struggle to be seen as reputable
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- Figure 29: Attitudes, by brand, November 2018
- Brand personality: Post Office and Nationwide are the most fun and ethical brands
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- Figure 30: Brand personality – macro image, November 2018
- Affordability the key attribute for supermarket brands
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- Figure 31: Brand personality – micro image, November 2018
- Brand analysis
- Big banks are respected but not necessarily admired
- A tale of two building societies – Nationwide and Coventry
- Most challengers still facing an uphill battle for recognition
The Consumer – What You Need to Know
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- One in four UK adults has a mortgage
- Three in four borrowers have a fixed-rate loan
- Half on fixed-term deals say they will expire within 2 years
- Most with deals due to expire soon will seek out new deals
- More than half express concern about the impact of interest rate rises
- Most claim to have a good idea of how much they owe
- One third of renters say buying a home is a priority
Mortgage Ownership
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- One in four UK adults has a mortgage
- A third live in rented accommodation
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- Figure 32: Current housing situation, January 2019
- 35-54s are the most likely to own their home with a mortgage
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- Figure 33: Mortgage ownership, by age, January 2019
- City dwellers the least likely to have a mortgage
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- Figure 34: Homeownership versus renting, by region, January 2019
Type of Mortgage Held
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- Three in five mortgage holders have a fixed rate loan
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- Figure 35: Type of mortgage held, January 2019
- SVRs most common among older mortgage holders
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- Figure 36: Type of mortgage held, by age, January 2019
Expiration of Current Mortgage Deal
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- Half of fixed-term deals due to expire within the next 2 years
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- Figure 37: Expected expiration of current mortgage deal, January 2019
- Younger borrowers more likely to be nearing the end of product term
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- Figure 38: Expected expiration of current mortgage deal, by age, January 2019
- Most with deals set to expire soon plan to renew or refinance
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- Figure 39: Action likely to be taken upon expiration of current mortgage deal, January 2019
- Still more can be done to encourage borrowers to seek out better deals
- Shopping around as we know it set to become a thing of the past
Level of Concern about Interest Rate Rises and Mortgage Affordability
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- Half are very or somewhat concerned about impact of interest rate rises
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- Figure 40: Level of concern about impact of interest rate rises on mortgage affordability, January 2019
- Level of concern highest among younger borrowers
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- Figure 41: Level of concern about impact of interest rate rises on mortgage affordability, by age, January 2019
- Concern motivates borrowers to act
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- Figure 42: Level of concern about impact of interest rate rises on mortgage affordability, by Action likely to be taken upon expiration of current mortgage deal, January 2019
- Uncertainty offers brokers an opportunity to demonstrate value
Current Mortgage Situation and Planned Activity
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- Most borrowers have a good idea of how much they have left to pay
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- Figure 43: Agreement with statements about current mortgage, January 2019
- Three fifths on a variable rate have experienced rising costs in last year
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- Figure 44: Agreement with select statements about current mortgage, by mortgage type, January 2019
- 30% of under-35s planning on borrowing additional funds
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- Figure 45: Agreement with select statements about current mortgage, by age, January 2019
Attitudes and Behaviour toward Homeownership among Renters
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- Buying a home a priority for a third of renters
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- Figure 46: Attitudes and behaviour toward homeownership among renters, January 2019
- Two fifths of under-35s are actively saving for a deposit
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- Figure 47: Agreement with select statements about homeownership among renters, by age, January 2019
- Fear of rejection may be preventing many from realising their dreams
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 48: Best- and worst-case forecast of gross mortgage lending, 2018-23
- Forecast methodology
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