Table of Contents
Executive Summary
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- Impact of COVID-19 on mortgage advice
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- Figure 1: Short, medium and long-term impact of COVID-19 on mortgage advice, 2021
- The market
- Intermediary share of sales grows despite COVID-19
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- Figure 2: Volume and proportion of sales, by direct and intermediary, 2014-20
- Vast majority of mortgage sales are advised but execution-only is set to grow
- COVID-19 has had a significant impact on mortgage lending…
- …and communication channels
- FCA widens scope for non-advised sales
- Companies and brands
- Bank-based adviser numbers continue to decline
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- Figure 3: Proportion of different types of mortgage advice firms, by number of staff advising, 2019
- 2020 was a year of two halves for mortgage advice firms
- Investment in online channels and services accelerates
- The consumer
- COVID-19 has boosted interest in home buying…
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- Figure 4: Likelihood of taking out a mortgage to buy a property/move house in the next two years due to COVID-19, 2021
- …and the demand for mortgage advice
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- Figure 5: Likelihood of using a mortgage adviser due to COVID-19, 2021
- Consumers show a strong appetite for professional advice
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- Figure 6: Likelihood of using an adviser, 2021
- Bank-based advisers are more likely to appeal to younger adults
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- Figure 7: Types of adviser likely to use, 2021
- Recommendations play a major role when finding an adviser
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- Figure 8: Method of finding a mortgage adviser, 2021
- A blended channel approach is the way forward
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- Figure 9: Preferred channel for mortgage-related activities, 2021
- Prospective customers identify a range of benefits of using an adviser
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- Figure 10: Perceived benefits of using an adviser, 2021
- Confidence in arranging a mortgage independently is high…
- …but so is the expectation of using an adviser in the future
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- Figure 11: Confidence in arranging a mortgage, 2021
Issues and Insights
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- COVID-19 highlights the importance of advice
- The digital shift can enhance the customer experience
The Market – Key Takeaways
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- Intermediary share of sales grows despite COVID-19
- Vast majority of mortgage sales are advised but execution-only is set to grow
- COVID-19 has had a significant impact on mortgage lending…
- …and communication channels
Market Size – Share of Distribution
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- COVID-19 has had a big effect on the mortgage advice market
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- Figure 12: Short, medium and long-term impact of COVID-19 on the mortgage advice market, 2021
- Intermediary share grows despite COVID-19
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- Figure 13: Volume and proportion of sales, by direct and intermediary, 2014-20
- Vast majority of mortgage sales are advised but execution-only is set to grow
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- Figure 14: Proportion of advised and non-advised mortgage sales, 2014-20
Market Drivers
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- Mortgage sales decline in 2020
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- Figure 15: Annual gross Sterling secured lending to individuals, by purpose, 2016-20
- House prices and transactions increase in the second half of 2020
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- Figure 16: Annual house price index, 2016-20
- Rising unemployment could impact consumer confidence
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- Figure 17: Annual unemployment rate, 2016-25
- The CJRS will increase the need for advice
- Drop in bank base rate had limited impact on interest rates
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- Figure 18: Interest rates for selected types of mortgages, 2015-21
- High-LTV mortgages withdrawn during height of pandemic but brighter prospects in 2021
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- Figure 19: LTV ratio for mortgage lending, 2018-20
- COVID-19 is changing the way people interact with mortgage advisers
Regulatory and Legislative Changes
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- FCA widens scope for non-advised sales
- FCA published the final rules for mortgage advice…
- ….widening the scope for non-advised sales…
- …and requiring more transparency
- FCA sets out support for mortgage borrowers impacted by COVID-19
- The government extends the stamp duty tax relief…
- …and introduces the mortgage guarantee scheme
Companies and Brands – Key Takeaways
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- Mortgage advice market grew in 2019, but number of bank-based advisers continued to decline
- 2020 was a year of two halves for mortgage advice firms
- Investment in online channels and services accelerates
- Apps to assist home buying process will become more widespread
- Online mortgage brokers are expanding their products and services
Market Composition
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- The number of mortgage brokers remained stable in 2019…
- …but the mortgage advice market has been directly impacted by the pandemic
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- Figure 20: Number of firms and staff advising on mortgages, by type of firm, 2018 and 2019
- The mortgage intermediary market is dominated by small firms
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- Figure 21: Number of mortgage broker firms and staff, by adviser band, 2018 and 2019
Key Players
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- Largest national brokers
- Mortgage networks
- Mortgage clubs
- Lenders
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- Figure 22: UK mortgage providers, by total outstanding mortgage balances, 2019 and 2020
Competitive Strategies
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- Lenders tighten criteria and product distribution at the height of the crisis
- Lenders are investing in intermediary channels
- Online mortgage brokers are expanding their products and services
Launch Activity and Innovation
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- Lenders and brokers invest in mobile apps to assist home buying journey
- Demand for specialist mortgages and advice set to increase post-pandemic
The Consumer – Key Takeaways
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- The COVID-19 pandemic highlights the importance of advice
- Advisers will continue to play a dominant role in the distribution of mortgages
- A blended channel approach is the way forward for mortgage activities
Impact of COVID-19 on Consumer Behaviour
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- COVID-19 has boosted interest in buying a new property
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- Figure 23: Likelihood of taking out a mortgage to buy a property/move house in the next two years due to COVID-19, 2021
- The pandemic highlights the importance of advice…
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- Figure 24: Likelihood of using a mortgage adviser due to COVID-19, 2021
- …and will create more complex lending decisions
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- Figure 25: Impact of COVID-19 on household finances, 2021
Mortgage Ownership
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- A quarter of adults have a mortgage
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- Figure 26: Current housing situation, 2021
- Millennials and Gen X are main targets for mortgage advice
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- Figure 27: Current housing situation, by generation, 2021
Timing and Source of Advice for Last Mortgage
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- 25% of mortgage holders arranged their current deal in the last year
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- Figure 28: Timing of the last mortgage or remortgage purchase, 2021
- Most people sought advice when they took out their last mortgage
- Bank-based advisers offer convenience and familiarity
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- Figure 29: Types of professional adviser used for the last mortgage or remortgage purchase, 2021
Plans to Arrange a Mortgage in Next Two Years
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- Young adults could benefit from mortgage advice at an earlier stage
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- Figure 30: Plans to take out a mortgage in the next two years, by age, 2021
- Increased savings activity will also boost demand for mortgage advice
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- Figure 31: Likelihood of taking out a mortgage to buy a property/move house in the next two years due to COVID-19, by plans to take out a mortgage, 2021
Future Plans: Intentions to Use a Mortgage Adviser and Type of Adviser
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- Prospective mortgage customers show a strong preference for professional advice…
- …and are looking for help that goes beyond access to products
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- Figure 32: Likelihood of using an adviser, 2021
- Trust and familiarity boost perceptions of advisers at main bank
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- Figure 33: Types of adviser likely to use, 2021
Preferred Method of Finding a Mortgage Adviser
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- A recommendation from friends and family is the leading factor in choosing a mortgage adviser…
- …but online resources are also important
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- Figure 34: Method of finding a mortgage adviser, 2021
- Mortgage intermediaries are more likely to see repeat business
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- Figure 35: Method of finding a mortgage adviser, by type of mortgage adviser likely to use, 2021
Channel Preferences for Mortgage Activities
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- The mortgage journey starts online…
- …but face-to-face interactions are important at an initial meeting
- The complexity of the activity impacts channel preference
- A blended channel approach is the way forward
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- Figure 36: Preferred channel for mortgage-related activities, 2021
Perceived Benefits of Using an Adviser
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- Prospective mortgage customers are looking for access to deals…
- …but also expert advice and recommendations
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- Figure 37: Perceived benefits of using an adviser, 2021
- Convenience plays a major role in intermediary advice market
Confidence in Arranging a Mortgage Independently
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- 70% are confident they could arrange a mortgage independently…
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- Figure 38: Confidence in arranging a mortgage, 2021
- …but they are not less likely to turn to a mortgage adviser
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- Figure 39: Likelihood of using an adviser, by confidence in arranging a mortgage independently, 2021
- Confidence impacts the type of service mortgage customers will expect
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- Figure 40: Perceived benefits of using an adviser, by confidence in arranging a mortgage independently, 2021
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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