Table of Contents
Issues in the Market
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- Key issues
- Definitions
- Abbreviations
Future Opportunities
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- Diversification beyond mortgages
- Neutral locations could be a good source of business
Market in Brief
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- Mortgage advice firms continue to struggle
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- Figure 1: Number of mortgage and home finance firms, January 2006-March 2010
- Mortgage lending falls sharply in 2009
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- Figure 2: Total gross advances (not seasonally adjusted), 2001-10
- Funding and product availability continue to be major challenges
- Mortgage intermediary share falls to 55%
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- Figure 3: Proportional distribution of regulated mortgage sales, by channel, 2006/07-2009/10
- Mortgage marker faces increased regulatory scrutiny
- The consumer appetite for mortgage advice
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- Figure 4: Agreement with statements about arranging/choosing a mortgage, December 2009
- A shift in the challenges faced by intermediaries
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- Figure 5: Main challenges currently facing mortgage intermediaries, March 2009 and March 2010
- Business priorities also reflect a changed environment
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- Figure 6: Mortgage intermediary priorities over the next six months, March 2009 and March 2010
- The intermediary/lender relationship
Internal Market Environment
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- Key points
- Sharp fall in mortgage product availability hits intermediary sector
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- Figure 7: TrigoldCrystal Product Index, average number of intermediary products available, April 2007-March 2010
- Fears over the mortgage funding gap
- Funding gap places greater pressure on intermediaries
- Low bank rates help to cushion homeowners from the recession…
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- Figure 8: Bank of England base rate, three-month (monthly average) LIBOR and new mortgages effective rate, January 2004-February 2010
- …but have undermined remortgage activity
- Mortgage approvals begin to rise
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- Figure 9: Number of monthly mortgage approvals (seasonally adjusted), by type, March 2008-March 2010
Broader Market Environment
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- Key points
- Consumer confidence is on the up…
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- Figure 10: Monthly, three-monthly and 12-monthly UK consumer confidence indices*, January
- …but is not translating to improved mortgage intentions
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- Figure 11: Expected mortgage and property purchase activity, Q3/Q4 2002-Q1/Q2 2010
- Most people believe that the decline in house prices is over
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- Figure 12: Expected house price movement over the next year, December 2009
- Property transactions show an upward trend in 2009
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- Figure 13: Number of UK residential property transactions with a value of £40,000 upwards – seasonally adjusted, Q2 2005-Q1 2010
- Property prices rebound in 2009
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- Figure 14: Annual change in UK house prices – comparison of four sources, Q1 2004-Q4 2009
- Arrears cases begin to recede
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- Figure 15: Number of residential loan accounts to individuals in arrears, Q3 2008-Q4 2009
Regulatory Landscape
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- Key points
- The Mortgage Market Review
- Intermediary implications and impact
- Tackling mortgage fraud
- Second charge and BTL regulation
- RDR read-across ruled out…
- …but new advice labels are likely to be implemented
- Impact of the RDR on the mortgage sector
- OFT recommends rules on estate agent referrals
- Mortgage intermediaries suffer FSA fee hike
Competitive Context – The Direct Threat
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- Key points
- Direct products account for around a third of the mortgage market
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- Figure 16: Proportion of intermediary and direct mortgage products, April 2009-March 2010
- Lenders use bundled product deals to boost appeal of direct channels
- 90% of intermediary sales made on an advised basis
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- Figure 17: Advised sales, by selling channels, April 2008-March 2009
Recent Market Developments
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- Key points
- Consolidation in the intermediary market
- High-profile business failures undermine confidence
- Merger and acquisitions activity
- New lenders on the horizon
- Credit scoring headache
- Smaller lenders take a more personal approach
- Embracing technology to attract consumers
- Online tools to provide brokers with a competitive edge
SWOT Analysis
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- Figure 18: SWOT analysis for the mortgage intermediary market, 2010
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Lending Market Overview
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- Key points
- Mortgage lending falls by 44% in 2009
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- Figure 19: Total mortgage lending, by gross and net advances (not seasonally adjusted), 2001-10
- Remortgage market declines sharply
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- Figure 20: Gross mortgage lending, by type of loan, 2004-09
- Slight improvement in FTB activity
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- Figure 21: Loans advanced for house purchase, by type of borrower, 2004-09
- Buy-to-let market fell by almost 70% in 2009
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- Figure 22: Number and value of new BTL mortgages sold, 2003-09
Trade Perspective
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- Participating companies
- Challenges facing the intermediary sector
- The intermediary/lender relationship
- The online threat
- The Mortgage Market Review
- Expectations and outlook for 2010
Intermediary Share of Mortgage Market
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- Key points
- Mortgage intermediary share falls to 55% in 2009
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- Figure 23: Proportional distribution of regulated mortgage sales, by channel, 2006/07-2009/10
- Looking forward – prospects for 2010
- Happier times – pre-credit crisis
Mortgage Intermediary Marketplace
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- Key points
- Mortgage advice firm numbers have fallen by 35% since the end of 2007
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- Figure 24: Number of mortgage and home finance firms, January 2006-March 2010
- A sharp fall in mortgage advice firm numbers during 2009
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- Figure 25: Number of mortgage and other home finance ARs and DA intermediary firms, by type, March 2007-March 2010
- The DA vs AR question
Key Players – Intermediary Mortgage Lenders
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- Key points
- Lloyds Banking Group and Santander are the top intermediary lenders
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- Figure 26: Mortgage market share, by overall gross lending and intermediary share of the market, 2009
- Building societies and specialist lenders lose share
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- Figure 27: Gross mortgage lending, by type of lender (not seasonally adjusted), 2004-09
Key Players – Intermediaries
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- Sesame Bankhall Group
- Legal & General
- Openwork
- Personal Touch Financial Services
Brand Communication and Promotion
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- Key points
- Advertising financial advice to consumers
- Financial advice advertising falls sharply in 2009
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- Figure 28: Advertising expenditure for financial advice services, 2007-09
- Advertising to mortgage intermediaries
- Mortgage intermediary adspend falls to 3% of 2007 total
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- Figure 29: Amount spent on advertising in the mortgage intermediary sector, 2006-09
- Exact Mortgage Experts was top advertiser in 2009
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- Figure 30: Top ten advertisers in the mortgage intermediary market, 2007-09
The Consumer – Attitudes towards Mortgage Advice
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- Key points
- The growing influence of the internet
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- Figure 31: Agreement with statements about arranging/choosing a mortgage, by gender and socio-economic group, December 2009
- The appetite for advice is closely linked to age
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- Figure 32: Agreement with statements about arranging/choosing a mortgage, by age, December 2009
- Advice is on the agenda for potential borrowers
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- Figure 33: Agreement with statements about arranging/choosing a mortgage, December 2009
Mortgage Adviser Research – Business Confidence
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- Key points
- Business confidence is showing signs of improvement…
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- Figure 34: Business confidence for the next six months, April 2009-March 2010
- …but remains fragile
- Obtaining a competitive rate continues to be challenging
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- Figure 35: Proportion of clients intermediaries expect to obtain a better rate for, April 2009-March 2010
Mortgage Adviser Research – Intermediary Challenges and Priorities
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- Key points
- A shift in the challenges faced by intermediaries
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- Figure 36: Main challenges currently facing mortgage intermediaries, March 2009 and March 2010
- Concern about direct competition moves up the agenda
- Regulatory concerns also increase
- The online threat is increasing
- Cross-sale opportunities are the main focus for the next six months
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- Figure 37: Mortgage intermediary priorities over the next six months, March 2009 and March 2010
- Signs of improvements in confidence
Mortgage Adviser Research – Perspective on Lenders
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- Key points
- Most advisers do not feel supported by lenders
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- Figure 38: Agreement with the statement that lenders are supporting intermediaries, April 2009-March 2010
- Treating brokers fairly remains a sore subject
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- Figure 39: Agreement with the statement that lenders are treating brokers fairly, April 2009-March 2010
- Lender communication is getting better
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- Figure 40: Agreement with the statement that lenders are keeping advisers informed on changes within the market, April 2009-March 2010
- Product communication is less of a concern
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- Figure 41: Agreement with the statement that lenders are providing sufficient notice before adding/ removing rates /products, April 2009-March 2010
- Managing business volumes
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- Figure 42: Agreement with the statement that lenders are responsibly managing business volumes, April 2009-March 2010
Mortgage Adviser Research – Perspective on the Mortgage Market Review
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- Key points
- Affordability and income verification proposals concern intermediaries…
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- Figure 43: Assessment of the impact of selected proposals from the Mortgage Market Review on the intermediary sector, March 2010
- …but there is greater support for extension of Approved Person regime
Appendix – Market Background
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- Overview of complex mortgage distribution structure
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- Figure 44: Overview of distribution channels within the mortgage marketplace since mortgage regulation
- Different types of mortgage advisers
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