Table of Contents
Issues in the Market
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- Key themes of the report:
- Definitions
- Conversion factors
- Abbreviations
Insights and Opportunities
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- Help with foreign house purchases
- Retain consumers with gifts or incentives
- Appeal to the heart not the head
Market In Brief
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- Interest rates will slow the market
- Mortgage lending triple in RoI to €25 billion
- Mortgage lending in NI reaches €2.1 billion
- Short term growth lies in desire to remortgage
- Housing reaching the limits of affordability
- Is the property market boom over?
Fast Forward Trends
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- Trend 1: Home as Pension
- Definition
- Context: general observations
- What next?
- Trend 2: Home-A Loan?
- Definition
- Context: general observations
- What next?
Strengths and Weaknesses in the Market
Internal Market Environment
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- Key Points
- Fewer FTBs to drive the market
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- Figure 1: proportion of FTBs to house sales, NI and RoI, 2000-06
- Means fewer fresh links in the chain
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- Figure 2: Number of home loans made to FTBs, NI and RoI, 2001-06
- Investors pick up the slack
- Focus turns to existing homeowners
- Some FTBs seek to remortgage quickly
- The Internet: from information source to selling tool
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- Figure 3: Percentage of adults using the Internet, either at home or at work, NI and RoI, 2001-06
- Online mortgage arrangement to grow
- Sub-prime mortgages grow in RoI
- Planning laws to boost NI equity release market
- Republic says farewell to stamp duty
- Mortgages starting later
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- Figure 4: Average age of first time buyers, UK, 1974-2005
- FTBs become older…
- …as major lifestages start later
- Potential for mortgages to end later as well
- Some consumers seek to repay mortgages early
- Mortgages as pensions
- Pension mortgages are a niche market…
- …but investing in homes for retirement is likely to be a significant market
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- Figure 5: Lending for second homes and holiday homes, RoI, 2003-07
- Brokers and intermediaries…
- …make the market more price sensitive
- Buying abroad
Broader Market Environment
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- Key Points
- Interest rates prompt remortgaging and switching
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- Figure 6: UK and eurozone interest rates, 2001-07
- Mortgage repayments to increase…
- …prompting a switch to fixed rate mortgages
- 50% of market unaware of interest rates
- NI economy particularly susceptible to rate rises
- Where will it stop?
- Property reaching the limits of affordability
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- Figure 7: Average property prices, RoI and NI, 2000-06
- Repossessions increasing
- Prompting lenders to be more flexible
- Political stability in NI should promote investment and property buying
- House prices growth slowing in RoI
- A growing immigrant mortgage market
- Average household getting smaller
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- Figure 8: Number of households, by size, NI and RoI, 2001-06
Competitive Context
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- Key Points
- Rented properties account for a quarter of households
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- Figure 9: Home ownership status among adults in NI and RoI, 2006
- Renting to grow, mortgages to slow
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- Figure 10: Home ownership status among adults in NI and RoI, 2001-06
Who’s Innovating?
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- Key points
- Bidding for business
- Mortgages for cash-poor consumers
- Automated valuation models (AVM)
Market Value and Forecast
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- Key points
- Overall mortgage debt has tripled since 2001
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- Figure 11: Value of outstanding mortgages, RoI and NI, 2001-06
- Average size of loan almost doubled in RoI
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- Figure 12: Number and value of mortgage loans approved, RoI, 2001-12
- Number of homebuyers has reached its peak in RoI
- Mintel forecast explanation
- NI mortgage market needs more FTBs
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- Figure 13: Number and value of mortgage loans approved, NI, 2001-12
- Fewer FTBs slows housing market
- Will the housing market cool off?
- Low return on buy-to-let investments
- Not all doom and gloom in NI
- Slow growth, but ‘growth’ nonetheless
- Still growth for mortgages as consumers move to remortgaging and top-ups
- Fixed rates will continue to gain popularity
- More switching likely
- Variable rates will still be used
- Brokers to grow in RoI
Market Segmentation
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- Key Points
- FTBs vs existing homeowners
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- Figure 14: Number of mortgage loans approved, by buyer type, NI, 2001-06
- Rising prices – decreasing FTBs
- Value still increases
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- Figure 15: Number of mortgage loans approved, by buyer type, RoI, 2001-06
- Existing homeowners
- RoI buy-to-let market
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- Figure 16: Number and value of buy-to-let loans approved, RoI, 2005 and 2006
- BTL market to slow, despite overall optimism
- NI market may grow in line with UK predictions
- RoI top-up mortgages
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- Figure 17: Number and value of top-up loans approved, RoI, 2005 and 2006
Companies and Products
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- Key Points
- Banks and building societies
- Abbey
- Allied Irish Bank/First Trust
- Bank of Ireland
- EBS Building Society
- First Active
- Halifax (Bank of Scotland)
- The Mortgage Store
- IIB Homeloans Ltd
- Irish Nationwide
- Permanent TSB
- National Irish Bank
- Northern Bank
- Nationwide
- Progressive Building Society
- Ulster Bank
- Sub-prime mortgages
- Brokers
Channels to Market
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- Key Points
- Most mortgages arranged directly with the lender
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- Figure 18: How the mortgage was arranged, NI and RoI, 2002-06
- Brokers – good or bad?
- Arranging mortgages online
- No online brokers likely
Consumer: Ownership of Mortgages
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- Key Points
- 1.57 million mortgage holders in Ireland
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- Figure 19: Ownership of mortgages, NI and RoI, 2002-06
- Property prices more prohibitive for the RoI buyer
- Marital and parental lifestages still coincide with homeownership
- Helping the bank of mum and dad
- Repayment mortgages dominate the market
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- Figure 20: Type of mortgage owned, NI and RoI, 2002-06
- More pension mortgages than meets the eye?
- Most homeowners on variable rates
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- Figure 21: Type of repayment mortgage, NI and RoI, 2002-06
- Variable rate mortgage loses popularity…
- …reflecting a change in mortgage arrangement behaviour
- Encourages switching behaviour
Consumer: Remortgaging and Switching
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- Key Points
- More homeowners increase the value of their mortgage
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- Figure 22: Mortgage owners who have increased the value of their mortgage, NI and RoI, 2002-06
- Home improvement is the main reason for remortgaging
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- Figure 23: Mortgage owners who have increased the value of their mortgage, by reason for remortgaging, NI and RoI, 2003-06
- More mortgage owners switch provider
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- Figure 24: Mortgage owners who have changed providers in the last 12 months, NI and RoI, 2002-06
- Apathy towards switching
Consumer: Saving Up and Paying Off
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- Key Points
- Saving a deposit in a buy now pay later culture
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- Figure 25: What people are saving for, NI and RoI, 2006
- Mortgage overpayments
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- Figure 26: Spending priorities, NI and RoI, 2006
- Pay off loans before making additional payments
Appendix
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- Regional definitions
- Population 2006
- BMRB Target Group Index (TGI) sample sizes
- Sample sizes for Millward Brown data
- Economy
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- Figure 27: Health of the economy, NI and RoI, 2002-07
- Figure 28: House price to income ratio, NI and RoI, 2000-05
- More buyers hit with stamp duty
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- Figure 29: Stamp duty thresholds and levies, UK and NI, 2007
- Figure 30: Stamp duty thresholds and levies, RoI 2007
- Notes on first time buyers
- Adults who have used the Internet
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- Figure 31: Adult population who have used the Internet in the last 12 months, by demographic sub-groups, NI and RoI, 2006
- Population statistics
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- Figure 32: Population change by age group, NI, 2000-20
- Figure 33: Population change by age group, RoI, 2000-20
- Figure 34: Forecast population change, by age, NI, 2000-20
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- Figure 35: Forecast population change, by age, RoI, 2000-20
- Long-term responsibilities start later
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- Figure 36: Average age at marriage, men and women, NI and RoI, 2000-05
- Figure 37: Average age of women at birth of first child, NI and RoI, 1991-2005
- Many potential FTBs worried about finding a foothold
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- Figure 38: Current worries of adults under 35, NI and RoI, 2006
- Employment statistics
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- Figure 39: Percentage in employment, by age group, NI and RoI, 2000-05
- Additional consumer data tables
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- Figure 40: Ownership of mortgages, NI and RoI, 2004 and 2006
- Figure 41: Owners who have increased the value of their mortgage, NI and RoI, 2006
- Type of ownership
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- Figure 42: How the mortgage is owned, NI and RoI, 2006
- Figure 43: Top ten things people are saving for, by age, NI and RoI, 2006
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