The year 2001 witnessed a strengthening housing market and record levels of mortgage lending in the UK. Gross advances for home loans reached over £161 billion in 2001, an increase of 35% from the year previous. The market is large, both in value and volume terms - roughly 40% of adults have a mortgage, either solely or jointly held. Yet despite being a market of substantial size, competition among established players and from a host of new entrants is putting increasing pressure on margins.

To keep one step ahead of their rivals, lenders are taking advantage of technological advances to reduce operating costs and are constantly developing and diversifying products. There are over 2,500 products from more than 110 lenders currently on offer to UK consumers.

Competitive and economic forces will continue to play a role in the evolution of the market, as will increasing regulation. The Treasury's much awaited decision to allow the Financial Services Authority (FSA) to regulate mortgage intermediaries and advice has been largely welcomed across the industry. Inevitably though, statutory regulation will mean further contraction and consolidation, as margins are squeezed even more.

This report uses a range of sources and statistics to analyse and comment on trends, macro-economic indicators, and the main market factors relevant to the mortgage market. The main areas explored include regulation and current issues affecting the market, market size, major lenders and market share, product and distribution developments, and consumer behaviour and attitudes towards mortgages. The report concludes by examining future developments and presenting market forecasts to 2006.

Other Mintel reports of relevance to this market include:

- The Buy-to-Let Property Market, Finance Intelligence - UK Report, January 2002

- Life Protection, Finance Intelligence - UK Report, November 2001

- Sub-prime Lending, Finance Intelligence - UK Report, October 2001

- Home Insurance, Finance Intelligence - UK Report, July 2001

- Critical Illness Cover, Finance Intelligence - UK Report, April 2002.

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