Table of Contents
Introduction and Abbreviations
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- Scope of the report
- History
- Concepts
- Influence of contracts
- Legal underpinning
- Effect on product development
- Global information and research
- Special note on terminology
- Definitions
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Figure 1: Mortgage market drivers, January 2005
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Executive Summary
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- Background considerations
- Industry issues
- Market size
- The consumer
- Future development
International Context
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- Comparative market structure in Europe
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- Figure 2: Comparative European mortgage market metrics, selected metrics, eight large countries by country, 2003
- Conclusions for European participants
- Other potential entrants
Market Drivers
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- Impact of the property market
- The long-term picture
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- Figure 3: Real house prices (mix-adjusted), 1970-2003
- The recent picture
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- Figure 4: Monthly house prices, December 1999-November 2004
- Housing stock growth
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- Figure 5: Housing stock, by region, 1993-2003
- The link with incomes
- Affordability
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- Figure 6: Stamp duty payable on residential property purchase, by value band, December 2004
- North/South divide
- Buying-to-let
- Investment conditions
- Interest rates
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- Figure 7: Monthly average weighted mortgage interest rates, January 1999-January 2005
- The Stuck Market
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- Figure 8: FTSE 100 and FTSE All Share indices, daily prices, January 1996-January 2005
- Economic growth and low unemployment
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- Figure 9: Real annual change in GDP, RPI and workforce unemployed – UK, 1998-2007
- The competitive environment
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- Figure 10: Competitive model for the house mortgage industry, 2005
- Attracting first time buyers
- Importance of remortgaging
- Growth of mortgage equity withdrawal
- Growth of the non-standard market
- Demographic influences
- Singles are growing but so are the elderly
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- Figure 11: Proportion of persons living alone, 25-44 age group (%), 1971-2002
- All are getting wealthier…
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- Figure 12: Proportional distribution of the socio-economic groups, 1999-2008
- …except graduates who look like getting poorer
- Regulation
- Self-regulation
- External regulation
- European regulation
- Other factors
- Performance of the life assurance industry
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- Figure 13: Endowment insurance new business trends, 1997-2004
- Balance sheet structure
- Access to information technology
Market Size and Trends
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- Market participation
- Types of participant
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- Figure 14: Reference model for participation in mortgages market
- Market size
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- Figure 15: Schematic for mortgages market size
- Number of customers
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- Figure 16: Stock of mortgage loans outstanding, millions, 1995-2004
- Figure 17: Loans for house purchase, by type of borrower, 1998-2004
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- Figure 18: Proportions of first-time-buyers and movers, 1998-2004
- Value of loans
- Mortgage borrowing in context
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- Figure 19: Personal debt, amounts outstanding, 1993 and 1998-2004
- Figure 20: Mean value of outstanding mortgage loan, 1998-2004
- New business still there…
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- Figure 21: Net and gross lending secured on dwellings, £billion, 1998-2004
- …but slowing down sharply
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- Figure 22: Mortgage approvals, seasonally adjusted, by month, January 2003-November 2004
- Relying on churn
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- Figure 23: Gross advances, by type of lending, 1993 and 1998-2004
- Independence or naivety?
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- Figure 24: Interest rates on capped, fixed and variable rate loans for house purchase, by product type, 2000-04
- Banks making advances
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- Figure 25: Mortgage balances outstanding, by type of institution, 1994-2004
- Figure 26: Market shares in mortgages, adjusted for institution definition, 1994 and 2004
- Interest income modelling
Key Players
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- Supplier rankings
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- Figure 27: Largest mortgage lenders, ranked by residential mortgage assets, 2003
- Figure 28: Residential mortgage loan book growth, top five participants, 2002-03
- Profiles of leading providers
- Abbey
- Alliance & Leicester
- Barclays Bank
- Bradford & Bingley
- HBOS
- HSBC
- Lloyds TSB Group
- Nationwide Building Society
- Northern Rock
- The Royal Bank of Scotland
- Participants to watch
Product Development
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- Types of mortgage product
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- Figure 29: Taxonomy of mortgage products, 2004
- Loan structure
- Interest calculation
- Currencies
- Purpose
- Target market
- Distribution
- Ancillary product features
- Effect of mortgage regulation
- New product development
Distribution
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- Distribution mechanisms
- Direct marketing, telesales and the Internet
- Distribution channels
- An interim model for the mortgage distribution industry
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- Figure 30: Percentage of mortgage stock arranged directly with the lender, 1996-2003
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- Figure 31: Distribution model for mortgages, December 2004
- Use of the model
- Types of distributor
- Direct sales and tied agents
- Independent financial advisers
- Mortgage brokers
- Solicitors and accountants
- Extended value chains in mortgage distribution
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- Figure 32: Value chains in the mortgage market, December 2004
- Packaging in the mortgage market
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- Figure 33: Roles of brokers and packagers in mortgages, December 2004
Advertising and Promotion
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- What you read is what you remember
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- Figure 34: Industry-wide advertising expenditure on mortgage products, by media type, 2003 and 2004
- Spending on fashion as usual
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- Figure 35: Advertising expenditure, by selected mortgage type, 2003 and 2004
- Big players dominate
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- Figure 36: Mortgage advertisers spending £1 million+, 2003 and 2004
Consumer Financial Activity
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- Activity levels are down
- Relationship with the main financial services providers (MFSP)
- Saving and investment activity is set to slow
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- Figure 37: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2003-December 2004
- Above average activity from those aged 40-49
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- Figure 38: Expected financial activity, by socio-demographic and income groups, December 2004 and average for the last twelve quarters
- Consumers are placing a deposit, but not much else
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- Figure 39: Leading financial activities planned in the next 6 months, December 2003-December 2004
- Mortgage demand reflects slowdown in the property sector
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- Figure 40: Intended mortgage and property purchase activity, June 2002-December 2004
- The position primarily unchanged among MFSPs
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- Figure 41: Leading main financial services providers: Market shares, December 2003-December 2004
- RBS set to benefit from increased mortgage activity
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- Figure 42: Saving, investment and lending, market sizes by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), December 2004
- RBS customers remain the most active – NatWest can also expect high business levels
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- Figure 43: Activity levels of main financial providers’ customer bases, December 2004
- Implications for the mortgage business
The Consumer
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- Ownership of property
- Women are the owners, men the investors
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- Figure 44: Property ownership overall, first seven responses, December 2004
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- Figure 45: Property ownership overall, last six responses, December 2004
- Implications
- The affluent have the ambition
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- Figure 46: Property ownership overall, by age and socio-economic group, first seven responses, December 2004
- Implications
- Ambition everywhere with the North improving
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- Figure 47: Property ownership overall, by TV region, first seven responses, December 2004
- Implications
- Families need homes
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- Figure 48: Property ownership overall, by working status, marital status, own children in household, lifestage and Special Groups, first seven responses, December 2004
- Implications
- Location, location, location
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- Figure 49: Property ownership overall, by technology usage, ACORN group and tenure, first seven responses, December 2004
- Implications
- Retail is detail
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- Figure 50: Property ownership overall, by newspaper readership, television watching and supermarkets used, first seven responses, December 2004
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- Figure 51: Customer profile of supermarkets by socio-economic group, Autumn 2004
- Implications
- Mortgage ownership
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- Figure 52: Mortgage loan ownership overall, December 2004
- Implications
- The generation gap
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- Figure 53: Mortgage loan ownership, by age and socio-economic group, December 2004
- Implications
- Scotland and the North East poles apart
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- Figure 54: Mortgage loan ownership, by TV region, December 2004
- Implications
- The young are wary of endowments
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- Figure 55: Mortgage loan ownership, by working status, marital status, own children in household, lifestage and Special Groups, December 2004
- Implications
- Location, location, location again
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- Figure 56: Mortgage loan ownership, by technology usage and ACORN group, December 2004
- Implications
- Some way to go in educating the customers
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- Figure 57: Mortgage loan ownership, by technology usage and ACORN group, December 2004
- Implications
- Mortgage history
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- Figure 58: Mortgage history and intentions overall, December 2004
- Implications
- The youngsters have itchy feet
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- Figure 59: Mortgage history and intentions, by age and socio-economic group, December 2004
- Implications
- Regional variances hard to follow again
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- Figure 60: Mortgage history and intentions, by TV region, December 2004
- Implications
- Families cause disturbances
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- Figure 61: Mortgage history and intentions, by working status, marital status, own children in household, lifestage and Special Group, December 2004
- Implications
- Getting harder to keep the prime customers
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- Figure 62: Mortgage history and intentions, by technology usage, newspaper readership and television watching, December 2004
- Implications
- Supermarkets
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- Figure 63: Mortgage history and intentions, by ACORN group and supermarkets used, December 2004
- Implications
- Sources of future mortgage business
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- Figure 64: Proposed source of mortgage or remortgage, by gender, first six responses, December 2004
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- Figure 65: Proposed source of mortgage or remortgage, by gender, last six responses, December 2004
- Men look at the map, women ask for directions
- Implications
- Older customers like the ’Net
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- Figure 66: Proposed source of mortgage or remortgage, by age and socio-economic group, main seven responses, December 2004
- Implications
- Metropolitan sophisticates?
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- Figure 67: Proposed source of mortgage or remortgage, by TV region, main seven responses, December 2004
- Implications
- Families colouring attitudes again
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- Figure 68: Proposed source of mortgage or remortgage, by working status, marital status, own children in household, lifestage and Special Groups, main seven responses, December 2004
- Implications
- Internet is important for marketing
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- Figure 69: Proposed source of mortgage or remortgage, by technology usage, newspaper readership and television watching habits, main seven responses, December 2004
- Implications
- Supermarkets complex again
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- Figure 70: Proposed source of mortgage or remortgage, by technology usage, newspaper readership and television watching habits, main seven responses, December 2004
- Implications
Consumer Attitudes and Targeting Opportunities
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- Attitudes to property ownership
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- Figure 71: Attitudes to owning property overall, first five responses, December 2004
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- Figure 72: Attitudes to owning property overall, second five responses, December 2004
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- Figure 73: Attitudes to owning property overall, last five responses, December 2004
- Implications
- Oldies value security
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- Figure 74: Attitudes to owning property, by age and socio-economic group, first six significant responses, December 2004
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- Figure 75: Attitudes to owning property, by age and socio-economic group, last six significant responses, December 2004
- Implications
- Southerners conscious of their equity, Scots hard-headed
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- Figure 76: Attitudes to owning property, by TV region, first six significant responses, December 2004
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- Figure 77: Attitudes to owning property, by TV region, last six significant responses, December 2004
- Implications
- Work and relationships
- Implications
- Technology and media
- Implications
- Residential circumstances and shopping habits
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- Figure 78: Attitudes to owning property, by ACORN group and supermarket usage, first six significant responses, December 2004
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- Figure 79: Attitudes to owning property, by ACORN group and supermarket usage, last six significant responses, December 2004
- Implications
- Finding information
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- Figure 80: Attitudes to finding information overall, first seven responses, December 2004
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- Figure 81: Attitudes to finding information overall, last seven responses, December 2004
- Implications
- Internet popular in the Middle Ages
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- Figure 82: Attitudes to finding information, by age and socio-economic group, main channels, December 2004
- Implications
- Scots and Londoners wary
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- Figure 83: Attitudes to finding information, by TV region, main channels, December 2004
- Implications
- Families are independent
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- Figure 84: Attitudes to finding information, by working status, marital status, own children in household, lifestage and Special Groups, main channels, December 2004
- Implications
- Red top readers take it steady
- Implications
- The well off use the ’Net
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- Figure 85: Attitudes to finding information, by ACORN group, tenure and supermarket usage, main channels, December 2004
- Implications
- Choosing a new provider
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- Figure 86: Attitudes to choosing a new mortgage provider overall, first six responses, December 2004
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- Figure 87: Attitudes to choosing a new mortgage provider overall, last five responses, December 2004
- Implications
- Settling with age
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- Figure 88: Attitudes to choosing a new mortgage provider, by age and socio-economic group, main responses, December 2004
- Implications
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- Figure 89: Tentative mortgage product segmentation for major customer groups, December 2004
- Not so canny Scots!
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- Figure 90: Attitudes to choosing a new mortgage provider, by TV region, main responses, December 2004
- Implications
- Accommodating the family
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- Figure 91: Attitudes to choosing a new mortgage provider, by working status, marital status, own children in household, lifestage and Special Groups, main responses, December 2004
- Implications
- Media awareness is key
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- Figure 92: Attitudes to choosing a new mortgage provider, by technology and media use, main responses, December 2004
- Implications
- Residence illuminating
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- Figure 93: Attitudes to choosing a new mortgage provider, by ACORN group, tenure and supermarket use, main responses, December 2004
- Implications
- Further analysis
- Cross-analysis highlights that switchers are looking beyond their current lenders
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- Figure 94: Cross-analysis between changing mortgage and changing provider, December 2004
- Correlation analysis
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- Figure 95: Results of correlation analysis of consumers’ mortgage information behaviour, December 2004
- Consumer typology
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- Figure 96: Distribution of consumer types, by attitude to property, overall and by gender and socio-economic group, December 2004
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- Figure 97: Additional mortgage product segmentation by attitude to property, December 2004
Industry Views
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- Promotion
- Product development
- Distribution
- Competition
The Future of the Mortgage Market
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- Change management
- Whither the mortgage market?
Forecast
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- Figure 98: Forecast of mortgage loans outstanding, 2004-09
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- Figure 99: Forecast of gross advances, by type of lending, 2004-09
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