Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Gross mortgage lending reached £245.4 billion in 2016
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- Figure 1: Forecast of gross mortgage lending, 2011-21
- Companies and brands
- Lloyds Banking Group is the UK’s biggest mortgage provider
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- Figure 2: Mortgage market share, by gross new mortgage lending, 2016
- Britain’s leading banks carry accusations of being solely profit-driven
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- Figure 3: Attitudes towards and usage of selected brands, December 2016
- The consumer
- Consumers are split over how Brexit will affect home buying
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- Figure 4: Consumer attitudes towards the effects of Brexit on home ownership, December 2016
- A third of adults have a mortgage
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- Figure 5: Mortgage ownership, December 2016
- 52% of mortgage holders have a fixed-rate loan
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- Figure 6: Type of mortgage owned, December 2016
- 28% of mortgages were arranged in the last year
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- Figure 7: Timing of last mortgage, December 2016
- Online is a key site of mortgage research, but people prefer to apply in person
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- Figure 8: Methods used for/interested in using for researching and arranging a mortgage product, December 2016
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- Figure 9: Methods used for/interested in using for administering a mortgage product, December 2016
- A tenth of non-homeowners plan to buy a property in the next two years
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- Figure 10: Intentions to buy a property in the next two years, December 2016
- A quarter of Millennials anticipate needing to move elsewhere to buy
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- Figure 11: Renters’ attitudes towards mortgages and home ownership, December 2016
- What we think
Issues and Insights
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- Fixed-rate loans will grow further in popularity in uncertain times
- The facts
- The implications
- High-quality online channels are essential to stave off disruptors
- The facts
- The implications
- Assistance for first-time buyers must continue post-Help to Buy
- The facts
- The implications
The Market – What You Need to Know
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- Gross mortgage lending reached £245.4 billion in 2016
- First-time buyer numbers increased to 339,000
- The intermediary mortgage sector accounts for two thirds of the market
- Rates remain appealing to home buyers
- Brexit looms over the industry
- Buy-to-let takes a hit
Market Size and Forecast
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- Mortgage lending grew by 11% in 2016…
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- Figure 12: Gross mortgage lending, not seasonally adjusted, 2012-16
- …but it was a turbulent ride
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- Figure 13: Quarterly gross mortgage lending, not seasonally adjusted, 2014-16
- Gross mortgage lending is forecast to reach £271 billion in 2021
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- Figure 14: Forecast of gross mortgage lending, 2011-21
- Figure 15: Forecast of gross mortgage lending, at current and constant prices, 2011-21
- Forecast methodology
Market Segmentation
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- First-time buyer numbers grew again last year
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- Figure 16: Volume of new mortgages, by purpose, not seasonally adjusted, 2012-16
- Remortgaging continues apace
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- Figure 17: Value of new mortgages, by purpose, not seasonally adjusted, 2012-16
Channels to Market
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- Two thirds of new mortgages were sold via intermediaries in 2015/16
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- Figure 18: Distribution of regulated mortgage sales, direct versus intermediated, 2011/12-2015/16
- Figure 19: Distribution of regulated mortgage sales, advised versus non-advised, 2011/12-2015/16
- Banks retain role as first port of call for mortgage advice
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- Figure 20: Sources of mortgage advice used for last mortgage/remortgage, December 2016
Market Drivers
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- Price growth was steady in 2016
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- Figure 21: Annual change in average UK house prices – ONS and Nationwide house price indices, Q1 2009-Q3 2016
- Rates remain appealing for borrowers
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- Figure 22: Monthly interest rate of UK monetary financial institutions (excluding Central Bank) for 2-year fixed-rate mortgage at 75% LTV, 2-year variable-rate mortgage at 75% LTV and standard variable-rate (SVR) mortgage, January 2011-December 2016
- A “broken” housing market
- Planning for the right homes in the right places
- Building homes faster
- Diversifying the market
- Helping people now
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- Figure 23: Number of permanent dwellings started and completed, 2009/10-2015/16
- Approvals fell in the immediate aftermath of the EU referendum…
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- Figure 24: Monthly mortgage approvals, by purpose of loan, not seasonally adjusted, 2016
- …and Brexit has the potential for further impact
Regulatory and Legislative Changes
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- The Mortgage Credit Directive came into effect in 2016…
- …while more regulation could be on the way
- Regulatory changes dampen the appeal of buy-to-let
- The end of the Help to Buy Mortgage Guarantee…
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- Figure 25: Monthly volumes and value of mortgages completed using the Help to Buy Mortgage Guarantee scheme, and value of Help to Buy Guarantees provided, October 2013-September 2016
- …but first-time buyers get a boost from the Lifetime ISA
Companies and Brands – What You Need to Know
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- Lloyds Banking Group is the UK’s biggest mortgage provider
- Digital innovations offer a new route to market for challengers
- Britain’s leading banks carry accusations of being solely profit-driven
Market Share
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- Lloyds Banking Group leads a congested market
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- Figure 26: Selected mortgage providers, market share by gross new mortgage lending, 2014-16
Company Profiles
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- Lloyds Banking Group
- Profile
- Recent performance
- Recent activity
- Nationwide Building Society
- Profile
- Recent performance
- Recent activity
- Santander
- Profile
- Recent performance
- Recent activity
- Royal Bank of Scotland
- Profile
- Recent performance
- Recent activity
- Barclays
- Profile
- Recent performance
- Recent activity
- HSBC
- Profile
- Recent performance
- Recent activity
Innovations and Launches
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- Digital innovations offer a new route to market for challengers
- High-LTV lending is back
Advertising and Marketing Activity
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- Adspend on mortgages remained fairly level in 2016
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- Figure 27: Total above-the-line, online display and direct mail advertising expenditure on mortgages, 2012-16
- TV now makes up over half of mortgage adspend
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- Figure 28: Total above-the-line, online display and direct mail advertising expenditure on mortgages, by media type, 2015-16
- HSBC is the biggest advertiser in the mortgage market
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- Figure 29: Top 10 advertisers for above-the-line, online display and direct mail advertising expenditure on mortgages, 2012-16
- Nielsen Ad Intel coverage
Brand Research
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- What you need to know
- Brand map
- Post Office and Nationwide are seen as trustworthy and different, followed by Santander and Halifax
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- Figure 30: Attitudes towards and usage of selected brands, December 2016
- Key brand metrics
- Consumers are most likely to recommend Nationwide
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- Figure 31: Key metrics for selected brands, December 2016
- Brand attitudes: High street brands have a reputational advantage
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- Figure 32: Attitudes, by brand, December 2016
- Brand personality: Halifax is considered fun and engaging
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- Figure 33: Brand personality – Macro image, December 2016
- HSBC and Barclays are most likely to be labelled as profiteering
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- Figure 34: Brand personality – Micro image, December 2016
- Brand analysis
- Post Office enjoys the same positive perceptions as building societies
- TSB and Halifax are reliable and accessible
- HSBC and Barclays can be relied upon, but are profit-focused
- Tesco Bank and The Co-operative Bank: Challengers struggling to stand out
The Consumer – What You Need to Know
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- Consumers are split over how Brexit will affect home buying
- A third of adults have a mortgage
- Online is key for mortgage research, but people prefer to apply in person
- A tenth of non-homeowners plan to buy a property in the next two years
- A quarter of Millennials anticipate needing to move elsewhere to buy
Effects of Brexit
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- Consumers are split over how Brexit will affect home buying
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- Figure 35: Consumer attitudes towards the effects of Brexit on home ownership, December 2016
- 48% think that Brexit will negatively impact the cost of living
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- Figure 36: Consumer attitudes towards the effects of Brexit on the economy and personal finances, December 2016
- Mortgage holders are more optimistic about Brexit
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- Figure 37: Consumer attitudes towards the effects of Brexit on the availability of mortgages, by mortgage ownership, December 2016
Mortgage Ownership
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- A third of adults have a mortgage
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- Figure 38: Mortgage ownership, December 2016
- Single consumers find it much harder to get on the property ladder
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- Figure 39: Mortgage ownership, by marital status, December 2016
- 28% of consumers rent their own home
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- Figure 40: Rental activity, December 2016
Type of Mortgage Owned
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- Fixed-rate deals are the most popular mortgages
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- Figure 41: Type of mortgage owned, December 2016
- Younger consumers are more likely to have a fixed-rate mortgage
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- Figure 42: Type of mortgage owned, by age, December 2016
Timing of Last Mortgage Purchase
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- 28% of mortgages were arranged in the last year…
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- Figure 43: Timing of last mortgage, December 2016
- …and three quarters of those took fixed-rate deals
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- Figure 44: When mortgage was arranged, by type of mortgage held, December 2016
Methods Used for Mortgage-related Activities
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- Online is key for mortgage research, but people prefer to apply in person
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- Figure 45: Methods used for/interested in using for researching and arranging a mortgage product, December 2016
- Branch services are still valued for making substantial amendments to mortgages
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- Figure 46: Methods used for/interested in using for administering a mortgage product, December 2016
- Telephone services offer vital contact for inexperienced borrowers
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- Figure 47: Use/interest in using telephone services for mortgage-related activities, by generation, December 2016
Home Buying Plans
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- A tenth of non-homeowners plan to buy a property in the next two years
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- Figure 48: Intentions to buy a property in the next two years, December 2016
- Millennials are the most aspiring potential home buyers
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- Figure 49: Intentions to buy a property in the next two years, by generation, December 2016
- High-LTV loans likely to be in high demand
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- Figure 50: Intentions to buy a property in the next two years, by value of savings and investments, December 2016
Renters’ Attitudes towards Mortgages and Home Ownership
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- 22% of renters think lenders make it too hard to get a mortgage
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- Figure 51: Renters’ attitudes towards mortgages and home ownership, December 2016
- One in six renters are currently saving for a deposit…
- …while 19% of under-35s are planning to use a Help to Buy or Lifetime ISA
- Older renters are most likely to be happy about their situation
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- Figure 52: Agreement with the statement “I would prefer to rent than own my own home”, by age, December 2016
- A quarter of Millennials anticipate needing to move elsewhere to buy
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- Figure 53: Agreement with the statement “I think I will need to move somewhere else to be able to afford to buy a property”, by generation, December 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 54: Best- and worst-case forecast of gross mortgage lending, 2016-21
- Forecast Methodology
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