Table of Contents
Issues in the Market
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- Key issues:
- Abbreviations
Insights and Opportunities
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- Customer retention must remain a key strategic focus
- Fixed rate products offer distinct appeal to borrowers
- Products with no tie-in period should also prove popular
- A significant minority of borrowers also want flexible products
Market in Brief
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- Fall-out from the credit crunch continues to exert market pressure
- The overall level of mortgage lending has started to wane
- Trade perspective: Credit crunch provides the key market challenge
- Mintel’s research findings: Mortgage ownership
- Mintel’s research findings: Remortgage activity
- Mintel’s research findings: Targeting opportunities
Fast Forward Trends
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- Decline of Deference
- What's it about?
- What we've seen
- What next?
- Finance in Flux
- What's it about?
- What we've seen
- What next?
Broader Market Environment
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- Key points
- Personal sector indebtedness has risen to record levels
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- Figure 1: Total household debt, 1993-2007
- Concerns are rising about households’ ability to repay its debt
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- Figure 2: Mortgage debt to households’ disposable income, 1977-2007
- But arrears and possessions remain at relatively low levels
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- Figure 3: Repossessions and arrears as a proportion of total mortgages, 1987-2007
- The future path of interest rates will be crucial
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- Figure 4: Bank of England base rate, end of quarter, 1972-2008
- The number of people in employment is at record levels
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- Figure 5: Summary of the UK labour market, 1995-2007
- A rise in the number of households will boost housing demand
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- Figure 6: Total number and average size of households in the UK, 1991-2012
Internal Market Environment
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- Key points
- The US sub-prime mortgage crisis has instigated a credit crunch
- Liquidity shortages continue to plague the mortgage market
- Property transactions remained at healthy levels in 2007
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- Figure 7: Property transactions in England and Wales, 1980-2007
- Although housing turnover has now started to wane
- The rate of house price growth has also started to fall
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- Figure 8: Annual house price inflation in the UK, 1995-2007
- House price inflation varies significantly on a regional basis
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- Figure 9: Mix-adjusted house prices by region, 2007
Competitive Context
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- Key points:
- The unsecured lending sector is one potential competitor
- The main competition stems from the rented housing sector
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- Figure 10: Proportion of households in England and Wales, by tenure, 1981-2007
Strengths and Weaknesses in the Market
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- Figure 11: Strengths and weaknesses in the mortgage market
- Strengths
- Weaknesses
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Who’s Innovating?
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- Key points
- Future product innovation will encompass a range of initiatives
- Green mortgage sector is likely to see further development…
- …from ‘dark’ to ‘light’ green
Trade Perspective
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- Fallout from the credit crunch provides the key market challenge
- Total mortgage lending is expected to fall during 2008
- Product innovation will encompass a broad range of initiatives
- Intermediaries’ share of mortgage lending could fall in 2008
- Customer complaints over mortgage fees are seen to be rising
Market Size and Forecast
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- Key points
- There are 11.8 million mortgage accounts in the UK
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- Figure 12: Total number of mortgage accounts, 1997-2007
- Total mortgage debt has risen to almost £1.2 trillion
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- Figure 13: Total value of outstanding mortgage debt, 1997-2007
- Gross mortgage lending rose to record levels in 2007
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- Figure 14: Gross and net lending secured on dwellings, 1997-2007
- The overall level of mortgage lending has started to wane
- Other advances fuelled mortgage lending during 2007
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- Figure 15: Gross advances, by type of loan, 2002-07
- First time buyers account for just over a third of all loans
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- Figure 16: Loans for house purchase, by type of borrower, 2002-07
- Fixed rates accounted for almost three quarters of lending in 2007
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- Figure 17: Loans for house purchase and remortgages, by type of product, 2002-07
- But demand for tracker mortgages has now started to rise
- Forecast
- Fall in gross advances
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- Figure 18: Gross and net lending secured on dwellings, 2003-12
- Remortgages to take centre stage in 2008
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- Figure 19: Gross advances, by type of loan, 2002-07
- Factors incorporated
Market Share
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- Key points
- Banks account for more than half of all mortgage balances
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- Figure 20: Mortgage balances outstanding, by type of institution, 1997-2007
- Other specialist lenders have enjoyed spectacular growth rates
- HBOS accounts for a fifth of all mortgage balances
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- Figure 21: Top 30 mortgage lenders, ranked by total mortgage balances outstanding, 2006
- Five specialist lenders are in the top 20
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- Figure 22: Top 30 mortgage lenders, ranked by gross mortgage lending, 2006
Companies and Products
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- Key points
- Mortgage customers can choose from a diverse product range…
- …but the range has seen a huge post-credit crunch contraction
- Falling loan-to-values
- Tracker products have recently become more popular
- Firms repositioning and changing strategy
- Company snapshots
- HBOS
- Abbey
- Lloyds TSB
- Nationwide Building Society
Brand Communication and Promotion
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- Key points
- The mortgage industry invests heavily in advertising
- Mortgage providers spent £81 million on advertising in 2007
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- Figure 23: Advertising expenditure on mortgage products, 2003-07
- The Press is the main advertising medium used by lenders
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- Figure 24: Advertising expenditure on mortgage products, by media type, 2006-07
- Norwich Union tops the mortgage adspend table
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- Figure 25: Advertising expenditure on mortgage products, by organisation, 2006-07
Brand Elements
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- Brand map
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- Figure 26: Attitudes and usage of mortgage brands, January 2008
- Northern Rock
- What the consumer thinks
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- Figure 27: Attitudes towards the Northern Rock brand, January 2008
- Halifax
- What the consumer thinks
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- Figure 28: Attitudes towards the Halifax brand, January 2008
- Abbey
- What the consumer thinks
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- Figure 29: Attitudes towards the abbey brand, January 2008
- HSBC
- What the consumer thinks
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- Figure 30: Attitudes towards the HSBC brand, January 2008
- Nationwide
- What the consumer thinks
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- Figure 31: Attitudes towards the Nationwide brand, January 2008
- Barclays
- What the consumer thinks
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- Figure 32: Attitudes towards the Barclays brand, January 2008
- Lloyds TSB
- What the consumer thinks
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- Figure 33: Attitudes towards the Lloyds TSB brand, January 2008
- NatWest
- What the consumer thinks
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- Figure 34: Attitudes towards the NatWest brand, January 2008
- Brand qualities of mortgage brands
- Barclays most profit-driven
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- Figure 35: Word association for various mortgage brands, January 2008
- Experience of mortgage brands
- Building society heritage shows
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- Figure 36: Consumer usage of various mortgage brands, January 2008
- Brand consideration for mortgage brands
- Northern Rock – a pariah brand?
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- Figure 37: Consideration of various mortgage brands, January 2008
- Brand momentum for mortgage brands
- Halifax seen to be gaining most ground
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- Figure 38: Momentum for various mortgage brands, January 2008
- Brand satisfaction for mortgage brands
- Nationwide leads the way for excellent satisfaction
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- Figure 39: Brand satisfaction with various mortgage brands, January 2008
- Brand commitment to mortgage brands
- Nationwide – the only brand for the loyalists
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- Figure 40: Commitment to various mortgage brands, January 2008
- Round up
Channels to Market
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- Key points
- The mortgage distribution landscape has changed in recent years
- Many borrowers still prefer to arrange their loan in a branch
- Remote channels have complemented the distribution mix
- Intermediaries are also performing an increasingly important role
The Consumer – Mortgage Ownership
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- Key points
- Survey background
- Around a third of all adults currently hold a mortgage
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- Figure 41: Property ownership, December 2007
- More than two-thirds of ABC1 35-54s own a mortgage
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- Figure 42: Property ownership, by gender, age, and socio-economic group, December 2007
- Mortgage demand is typically driven by life events
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- Figure 43: Property ownership, by detailed lifestage groups, December 2007
- Two thirds of high income households own a mortgage
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- Figure 44: Property ownership, by working status, income, ACORN group and TV region, December 2007
- Over half of all Waitrose customers hold a mortgage
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- Figure 45: Property ownership, by technology users, commercial TV viewing, newspaper readership and supermarket used, December 2007
- Three quarters of potential first time buyers are aged 18-34
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- Figure 46: Profile of mortgage holders and potential first time buyers, December 2007
- Repayment is by far the most common type of mortgage
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- Figure 47: Type of mortgage homeowners hold, December 2007
- A fifth of 45-54-year-old homeowners hold an endowment mortgage
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- Figure 48: Type of mortgage homeowners hold, by gender, age, and socio-economic group, December 2007
- Other types of mortgages appeal to the pre-/no family lifestage
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- Figure 49: Type of mortgage homeowners hold, by lifestage, working status, ACORN group and TV region, December 2007
The Consumer – Remortgage Activity
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- Key points
- The vast majority of consumers are satisfied with their mortgage
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- Figure 50: ‘Satisfied with current mortgage and mortgage provider’, December 2007
- A particularly high proportion of 45-54s are satisfied customers
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- Figure 51: ‘Satisfied with current mortgage and mortgage provider’, by gender, age, socio-economic group and lifestage, December 2007
- One in seven London mortgage holders are dissatisfied
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- Figure 52: ‘Satisfied with current mortgage and mortgage provider’, by income, TV region, technology users and newspaper readership, December 2007
- Almost half of all borrowers have switched their mortgage
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- Figure 53: ‘Haven't switched mortgage since I last moved house’, December 2007
- A majority of 45-54-year-olds no longer hold their original loan
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- Figure 54: ‘Haven't switched mortgage since I last moved house’, by gender, age, socio-economic group and lifestage, December 2007
- Almost six in ten borrowers in London hold their original loan
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- Figure 55: ‘Haven't switched mortgage since I last moved house’, by income, TV region, technology users and newspaper readership, December 2007
- Almost a quarter of all borrowers are inclined to remortgage
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- Figure 56: ‘Thinking of changing mortgage/mortgage provider in next 12 months’, December 2007
- A third of the pre-/no family lifestage group intend to remortgage
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- Figure 57: ‘Thinking of changing mortgage/mortgage provider in next 12 months’, by gender, age, socio-economic group and lifestage, December 2007
- More than three in ten London borrowers want to switch
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- Figure 58: ‘Thinking of changing mortgage/mortgage provider in next 12 months’, by income, TV region, technology users and newspaper readership, December 2007
The Consumer – Targeting Opportunities
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- Key points
- Fixed rate, no tie-in and flexibility are key product features
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- Figure 59: Key features of a mortgage, by gender, December 2007
- Fixed rate products appeal to a large minority of 18-34s
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- Figure 60: Key features of a mortgage, by age, December 2007
- More than four in ten ABs want a mortgage with no tie-in period
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- Figure 61: Key features of a mortgage, by socio-economic group, December 2007
- Almost a fifth of first time buyers want a 100% mortgage
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- Figure 62: Key features of a mortgage, by current mortgage position, December 2007
- Consumers typically view property as security and an investment
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- Figure 63: What owning property means to consumers, by current housing tenure, December 2007
- Attitudes to property vary according to housing tenure
- Dissecting the sample according to attitudes to property ownership
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- Figure 64: Attitudinal groups based on what property ownership means to consumers, by gender, age, socio-economic group, lifestage, special groups, working status, income and TV region, December 2007
- Housing tenure varies according to the attitudinal groups
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- Figure 65: Property ownership, by ‘what property ownership means to consumers’ typologies, December 2007
- Product preferences also vary across the attitudinal groups
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- Figure 66: Key features of a mortgage, by ‘what property ownership means to consumers’ typologies, December 2007
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