Table of Contents
Overview
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- Key issues covered in this Report
- Economic and other assumptions
- Products covered in this Report
Executive Summary
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- Impact of COVID-19 on the mortgage market
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- Figure 1: Short, medium and long-term impact of COVID-19 on the mortgage market, March 2021
- The market
- COVID-19 disruption leads to a 9% drop in lending across 2020
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- Figure 2: Market size and forecast for gross mortgage lending, 2015-25 (prepared March 2021)
- High-LTV mortgages disappear in 2020
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- Figure 3: LTV ratio for mortgage lending, Q1 2018- Q4 2020
- Rising unemployment poses a risk to the market
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- Figure 4: Quarterly unemployment rate, Q1 2017-Q4 2025
- Government interventions continue to shape the market
- Companies and brands
- Mortgage market experiences further consolidation
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- Figure 5: Market share of the leading mortgage providers, by total outstanding mortgage balances, December 2020
- Combine flexibility with certainty to reach cautious consumers
- Lenders versus the climate crisis
- Advertising expenditure declines a third as lending is restricted
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- Figure 6: Total above-the-line, online display and direct mail advertising expenditure on mortgages, 2016-20
- Mintel’s brand research confirms the strength of Nationwide’s reputation
- The Consumer
- Purchase activity exceeds remortgaging
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- Figure 7: Reason for taking out last mortgage, February 2021
- Brand perception matters when taking out a mortgage
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- Figure 8: Important factors in deciding on a mortgage lender, February 2021
- Speed of responding to borrowers should be prioritised
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- Figure 9: Key drivers of overall satisfaction with current mortgage provider, February 2021
- COVID-19 drives consumers to demand more space
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- Figure 10: Important features of a home, February 2021
- A fifth of people have plans to take out a mortgage
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- Figure 11: Mortgage plans, by age, February 2021
- COVID-19 has made people less likely to move
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- Figure 12: Impact of COVID-19 on moving plans, by age, February 2021
Issues and Insights
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- COVID-19 has distorted the mortgage market
- The role of the mortgage market in achieving net-zero
- In uncertain times consumers are demanding certainty and control
The Market – Key Takeaways
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- COVID-19 has had a significant impact on the mortgage market
- High-LTV mortgages disappear in 2020
- Rising unemployment poses a risk to the market
- Government interventions continue to shape the market
Market Size and Forecast
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- COVID-19 has a significant impact on the mortgage market
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- Figure 13: Short, medium and long-term impact of COVID-19 on mortgage lending, March 2021
- Mortgage lending falls 9% in 2020
- Lending has slowed for a number of years
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- Figure 14: Annual gross Sterling secured lending to individuals, 2014-20
- Mixed recovery expected in 2021
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- Figure 15: Market size and forecast for gross mortgage lending, 2015-25 (prepared March 2021)
- Figure 16: Market size and forecast for gross mortgage lending, 2015-25 (prepared March 2021)
- Outstanding secured lending grows 2.9%
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- Figure 17: Gross outstanding lending secured against residential properties, Q1 2015-Q4 2020
- Market drivers and assumptions
- Learnings from the last recession
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- Figure 18: Total secured lending (not seasonally adjusted), 2006-12
- Forecast methodology
Market Segmentation
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- House purchasing drove mortgage activity in 2020
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- Figure 19: Segmentation of gross mortgage lending, 2014-20
- Figure 20: Segmentation of gross mortgage lending, 2015-20
- High-LTV mortgages almost disappear in 2020
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- Figure 21: LTV ratio for mortgage lending, Q1 2018-Q4 2020
Channels to Market
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- Three quarters take advice
- COVID-19 will drive demand for specialist lenders and brokers
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- Figure 22: Sources of advice for mortgage/remortgage, February 2021
Market Drivers
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- Consumer confidence continues to recover
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- Figure 23: Financial confidence, weighted average of responses, January 2020-March 2021
- Rising unemployment poses a risk to the housing market
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- Figure 24: Quarterly unemployment rate, Q1 2017-Q4 2025
- House prices increase sharply in late 2020
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- Figure 25: Year-on-year house price changes, quarterly, Q1 2015-Q4 2020
- Housing transactions slow in 2020
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- Figure 26: UK residential property transactions over £40,000, 2007-20
- Interest rates for different products converge
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- Figure 27: Interest rates for selected types of mortgages, January 2015-February 2021
- Government support has protected mortgage holders
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- Figure 28: Number of residential mortgage repossessions, Q4 2017-Q4 2020
Regulatory and Legislative Changes
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- Government introduces Mortgage Guarantee scheme
- Extension of stamp duty holiday
- Help to Buy extension granted
- FCA extends ban on repossessions to April 2021
- New guidance issued over cladding rules
- The prospect of negative interest rates for the mortgage market
- Government paper recommends lenders consider energy efficiency
- Stepping in to protect leaseholders
Companies and Brands – Key Takeaways
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- Mortgage market experiences further consolidation
- Combine flexibility with certainty to reach cautious consumers
- Lenders versus the climate crisis
- Advertising expenditure declines a third as lending is restricted
- Nationwide has a particularly highly rated brand in mortgage lending
Market Share
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- Further consolidation in the mortgage market
- NatWest Group grows its share
- HSBC’s focus on mortgages leads to growth
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- Figure 29: UK mortgage providers, by total outstanding mortgage balances, 2019 and 2020
- Halifax dominates Lloyds Banking Group mortgages
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- Figure 30: Lender they hold their mortgage with, February 2021
Competitive Strategies
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- Supporting customers during COVID-19
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- Figure 31: Payment holidays granted, December 2020
- Targeting first-time buyers
- Mortgage lenders versus the climate disaster
- Combining flexibility and certainty
- Pulling back from an intensely competitive market
- Adopting a cautious approach to lending
Launch Activity and Innovation
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- Mortgage lenders embrace sustainability
- NatWest launches Green Mortgages
- Nationwide sets aside £1 billion to support energy efficiency
- Barclays expands its range of green home mortgages
- Ecology Building Society launches a new renovation mortgage product
- Saffron Building Society launches green Retro Fit mortgage
- Newbury Building Society adds GoGreen Reward for self-build mortgages
- LBG launches the Green Living and Eco Home Hub
- Addressing increasing financial complexity
- Metro Bank launches ‘near-prime’ mortgage range
- Bluestone launches ‘Age of the Unlendables’ campaign
- Combining long-term certainty with ongoing flexibility
- TSB launches Fix and Flex range
- Habito introduces a 40-year fixed-rate mortgage
- Perenna plans UK launch of 30-year fixed-rate mortgages
- Going beyond the industry standard to protect borrowers
- Nationwide bans repossessions for 12 months
- Leeds Building Society suspends arrears fees
Advertising and Marketing Activity
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- Advertising expenditure declines by a third in 2020
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- Figure 32: Total above-the-line, online display and direct mail advertising expenditure on mortgages, 2016-20
- Strong start followed by a slump in spending
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- Figure 33: Monthly above-the-line, online display and direct mail advertising expenditure for mortgages, 2020 compared to the five year average, 2016-20
- Nationwide leads advertising expenditure
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- Figure 34: Total above-the-line, online display and direct mail advertising expenditure on mortgages, leading advertisers, 2020
- Brand building makes up half of spending
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- Figure 35: Total above-the-line, online display and direct mail advertising expenditure for mortgages, by category, 2016-20
- TV spending dominates for most of the leading advertisers
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- Figure 36: Above-the-line, online display and direct mail advertising expenditure on financial services, by media type and advertiser, 2020
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 37: Attitudes towards and usage of selected brands, March 2021
- Key brand metrics
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- Figure 38: Key metrics for selected brands, March 2021
- Brand attitudes: Nationwide and Halifax stand out for service
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- Figure 39: Attitudes, by brand, March 2021
- Brand personality: Santander boasts a ‘fun’ image
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- Figure 40: Brand personality – macro image, March 2021
- HSBC more likely to be viewed as authoritative and prestigious
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- Figure 41: Brand personality – micro image, March 2021
- Brand analysis
- Nationwide comes highly recommended
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- Figure 42: User profile of Nationwide, March 2021
- Coventry Building Society is a lesser-known brand with a strong reputation
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- Figure 43: User profile of Coventry Building Society, March 2021
- Halifax has a reputation for customer service
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- Figure 44: User profile of Halifax, March 2021
- Yorkshire Building Society is better known but less used than other brands
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- Figure 45: User profile of Yorkshire Building Society, March 2021
- Santander: a fun brand worth paying more for
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- Figure 46: User profile of Santander, March 2021
- HSBC projects an authoritative and prestigious brand
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- Figure 47: User profile of HSBC Bank, March 2021
- TSB is a brand that struggles to deliver
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- Figure 48: User profile of TSB Bank, March 2021
The Consumer – Key Takeaways
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- COVID-19 will lead to more complex lending decisions
- Speed of responding to borrowers should be prioritised
- COVID-19 drives consumers to demand more living space
- COVID-19 has made people less likely to move
Impact of COVID-19 on the Mortgage Market
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- COVID-19 will create more complex lending decisions
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- Figure 49: Impact of COVID-19 on finances, 19 February-1 March 2021
- Growth in forced savings could get more people onto the property ladder
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- Figure 50: Changes to savings as a result of COVID-19, 19 February-1 March 2021
- Increased importance of open space and local amenities
- Government support skews the market
Reasons for Taking out a Mortgage
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- Remortgagers stick to what they know
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- Figure 51: Reason for taking out last mortgage, February 2021
- Flexibility and relationships are important for remortgagers
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- Figure 52: Important factors in choosing a mortgage, by reason for taking out last mortgage (net), February 2021
Important Factors in Choosing a Mortgage Lender
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- Brand perception matters when taking out a mortgage
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- Figure 53: Important factors in deciding on a mortgage lender, February 2021
- Set-up fees are a key driver of choice
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- Figure 54: Important factors in deciding on a mortgage lender, by age, February 2021
Satisfaction with Mortgage Lenders
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- High levels of satisfaction with online functionality
- Communication and support during COVID-19 could have been better
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- Figure 55: Satisfaction with specific factors regarding mortgage lenders, February 2021
- With age comes experience…and opinions
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- Figure 56: Overall satisfaction with mortgage lender, by age, February 2021
Key Driver Analysis
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- Mortgage lenders must become more responsive
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- Figure 57: Key drivers of overall satisfaction with current mortgage provider, February 2021
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- Figure 58: Overall satisfaction with current mortgage provider – key driver output, February 2021
- Methodology
Important Features of a Home
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- COVID-19 drives demand for outside space
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- Figure 59: Important features of a home, February 2021
- Demand for space driven by older people
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- Figure 60: Important features of a home, by age, February 2021
- Young people are focused on affordability and work
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- Figure 61: Important features of a home, by age, February 2021
- Families demand internal space and family ties
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- Figure 62: Important features of a home, households with children under 16 compared to the average, February 2021
- Housing costs are a major driver of moving
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- Figure 63: Plans to move in the next two years, by important features in a home, February 2021
Expected Mortgage Activity
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- Moving plans peak among 25-34 year olds
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- Figure 64: Mortgage plans, by age, February 2021
- Flat dwellers persuaded to move by COVID
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- Figure 65: Impact of COVID-19 on moving plans, by housing type, February 2021
Impact of COVID-19 on Potential Mortgage Activity
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- COVID-19 has dissuaded many people from moving
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- Figure 66: Impact of COVID-19 on moving plans, by age, February 2021
- COVID-19 polarises parents on the topic of moving
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- Figure 67: Impact of COVID-19 on moving plans, February 2021
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- Key driver analysis methodology
- Interpretation of results
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- Figure 68: Overall satisfaction with current mortgage provider – key driver output, February 2021
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- Figure 69: Satisfaction with current mortgage provider, February 2021
Appendix – Market Size and Forecast
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- Forecast methodology
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