Table of Contents
Executive Summary
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- The market
- The MMR has effectively mandated advice on most mortgages
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- Figure 1: Distribution of regulated mortgage sales, advised versus non-advised, 2009/10-2014/15
- Gross mortgage lending is expected to continue growing into 2020
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- Figure 2: Forecast of gross mortgage lending, 2010-20
- The consumer
- A third of people have a mortgage on their main home
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- Figure 3: Residential mortgage ownership, by age, December 2015
- Banks remain a key source of advice of mortgage advice for consumers
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- Figure 4: Main source of advice used in arranging last mortgage, December 2015
- Online is the most popular channel for researching mortgages
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- Figure 5: Channels for mortgage advice-related activities, December 2015
- A third of mortgage holders are likely to seek advice if an interest rate rise occurs
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- Figure 6: Likeliness to seek advice on how to cope with an interest rate rise, December 2015
- A third of mortgage holders think it is important to get advice early
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- Figure 7: Attitudes towards mortgage advice, December 2015
- The value of independence is well appreciated
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- Figure 8: Attitudes towards different types of mortgage adviser, December 2015
- What we think
Issues and Insights
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- Execution-only mortgages represent a thorny issue for lenders
- The facts
- The implications
- What does an advice-led mortgage market mean for adviser competition?
- The facts
- The implications
The Market – What You Need to Know
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- The mortgage market is growing despite affordability issues
- The MMR has placed advice at the heart of the mortgage market
The Mortgage Advice Market
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- The MMR has effectively mandated advice on most mortgages
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- Figure 9: Distribution of regulated mortgage sales, advised versus non-advised, 2009/10-2014/15
- Figure 10: Number of regulated mortgage sales, advised versus non-advised, 2012/13-2014/15
- Brokers benefited from the post-MMR capacity crunch
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- Figure 11: Distribution of regulated mortgage sales, direct versus intermediated, 2009/10-2014/15
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- Figure 12: Number of regulated mortgage sales, direct versus intermediated, 2012/13-2014/15
- Advising, selling and arranging complaints edge upwards
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- Figure 13: Home finance complaints made to finance companies, by cause of complaint, 2012/13-2014/15
The Mortgage Market
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- Mortgage lending advanced throughout 2015
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- Figure 14: Gross mortgage lending, not seasonally adjusted, 2011-15
- Gross mortgage lending is expected to continue growing into 2020
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- Figure 15: Forecast of gross mortgage lending, 2010-20
- Buy-to-let lending shows strongest activity since the financial crisis
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- Figure 16: Forecast of new buy-to-let mortgage advances – fan chart, 2010-20
- Traditional names continue to dominate lending
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- Figure 17: Leading residential mortgage providers, market share by gross new mortgage lending, 2015
Market Drivers
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- Growth in house prices slowed during 2015
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- Figure 18: Annual change in average UK house price – Comparison of four sources, by quarter, Q1 2008-Q4 2015
- Low interest rates mean advisers can support deal-hunting behaviour
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- Figure 19: Monthly interest rate of UK monetary financial institutions (excluding Central Bank) for two-year variable rate mortgage at 75% loan to value, two-year fixed rate mortgage at 75% loan to value and standard variable rate (SVR), January 2010-March 2016
- Market begins to settle following the MMR
- Advisers experienced a rush from buy-to-let customers ahead of regulatory changes
Companies and Brands – What You Need to Know
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- Advisers and lenders refresh advice strategies following the MMR
Competitive Strategies
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- Video mortgage advice sessions to ease pressure on branches
- Lloyds Bank and Halifax
- Nationwide
- Providers remove friction to speed up the application process
- HSBC
- Property Franchise Group
- Habito
- Partnerships continue to dominate strategy
- Tesco Bank launches Tesco Mortgage Intermediaries
- Mortgage Advice Bureau
The Consumer – What You Need to Know
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- A third of people have a mortgage on their main home
- Half of mortgagors used a branch-based adviser in the last five years
- Online is the most popular channel for researching mortgages
- A third of mortgage holders are likely to seek advice if an interest rate rise occurs
- 34% of mortgage holders think it is important to get advice early
- The value of independence is well appreciated
Mortgage Ownership
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- A third of people have a mortgage on their main home
- Ageing population is creating new challenges and opportunities for mortgage advice market
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- Figure 20: Residential mortgage ownership, by age, December 2015
Main Source of Mortgage Advice
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- Half of mortgage holders used a branch-based adviser in the last five years
- Intermediaries have a growing share of sales
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- Figure 21: Main source of advice used in arranging last mortgage, December 2015
Channel Preferences for Mortgage Advice-related Activities
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- Online is the most popular channel for researching mortgages
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- Figure 22: Channels for mortgage advice-related activities, December 2015
- Full online advice does have appeal among key audiences
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- Figure 23: Seeking advice on the most appropriate mortgage, by age, December 2015
- The majority of mortgage holders have used or would be interested in using only one channel
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- Figure 24: Number of methods used to complete mortgage advice-related activities, December 2015
Likelihood of Seeking Advice in the Event of an Interest Rate Rise
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- 38% of mortgage holders expressed concern about a potential interest rate rise in 2016
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- Figure 25: Level of concern about potential interest rate rise in 2016, December 2015
- A third of mortgage holders are likely to seek advice if an interest rate rise occurs…
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- Figure 26: Likeliness to seek advice on how to cope with an interest rate rise, December 2015
- …rising to half of Millennials
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- Figure 27: Likeliness to seek advice on how to cope with an interest rate rise, by generation, December 2015
- Tracker mortgage holders are only slightly more likely to seek advice
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- Figure 28: Likeliness to seek advice on how to cope with an interest rate rise, by ownership of different types of mortgage, December 2015
Attitudes towards Mortgage Advice
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- A third of mortgage holders think it is important to get advice early
- Advisers have to compete with online sources of information
- 17% would be happy to use online advice channels
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- Figure 29: Attitudes towards mortgage advice, December 2015
- Millennials need more than online information to support their mortgage purchase
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- Figure 30: Attitudes towards mortgage advice, by generation, December 2015
Attitudes towards Different Types of Mortgage Adviser
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- The value of independence is well appreciated…
- …but bank-based advice leads the way on perceptions of being low cost
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- Figure 31: Attitudes towards different types of mortgage adviser, December 2015
- Older Millennials are more likely to favour banks and building societies
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- Figure 32: People who think mortgage advisers at banks/building societies would be best able to provide each service, by age, December 2015
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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