Mortgage Advice - UK - 2021
Overview
 
62% of adults who own a mortgage or are looking to arrange a mortgage say they are likely to use an adviser, peaking at 75% among 25-34 year olds. This is a wide customer base and advisers have to consider and understand how different customer groups see the mortgage journey, the channels they prefer to use and what benefits they are looking for. 

The pandemic led to a sharp drop in demand for mortgage advice during the initial lockdown. Yet despite successive lockdowns, demand for advice has increased as the market recovered. However, the COVID-19 crisis has distorted the housing market, and consumers are looking for support to navigate uncertain times. Indeed, 49% of advice seekers say they are more likely to use a mortgage adviser due to COVID-19.

One of the biggest challenges for the mortgage advice market will be to remain relevant and adapt to the ever-changing needs of customers. The FCA has mandated that execution-only sales channels should be easier to use, and a large proportion of mortgage owners and potential buyers feel confident they could independently find and arrange the best mortgage for their needs. As a result, advisers will have to work harder to promote the knowledge, expertise and tailored solutions they can provide, as well as developing channels to rival the convenience of execution-only services.

The pandemic has accelerated the shift towards digital, and people and advisers alike are now more familiar with online communication channels. This creates opportunities for providers to expand the use of these channels in the future, in particular to bridge the gap between face-to-face meetings and other online channels. This will help lower costs for more traditional advice firms, as well as improve their geographical reach and perceptions of flexibility and convenience. 

Key issues covered in this Report
●	The impact of COVID-19 on the mortgage advice market.
●	Regulatory and legislative changes and how they are affecting the mortgage market.
●	An analysis of competitive strategies and launch activity.
●	How COVID-19 has affected consumer attitudes towards mortgage advice.
●	Channel preferences and benefits of using an adviser.

COVID-19: market context
The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It wasn't until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the reopening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March and with a hoped end to all restrictions by 21 June, although the growth of the Delta variant means this final lifting of restrictions was delayed. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England. 

Even before the full reopening of the economy, retail sales and Mintel’s own household finances tracker provided encouraging signs of a rapid return to consumer confidence and a willingness to spend at least some of the savings that many households were able to build up over the lockdown periods.

The UK’s vaccination programme started on 8 December 2020. As of 15 June nearly 80% of the UK population had received their first dose of the vaccine and more than 57% had received their second dose.

Economic and other assumptions
Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Economic and Fiscal Outlook report, but also take into account predictions made by other economic forecasts, including the Bank of England. 

After the fall of 9.9% over the course of 2020, the OBR’s scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022. GDP isn’t expected to return to pre-COVID-19 levels until Q2 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster-than-expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in Q4 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

The rapid vaccine rollout and the continued efficacy of the vaccine, however, mean that more recent economic forecasts have been significantly more optimistic than the OBR’s March forecast, even given the rise of the Delta variant. We have factored this rise in optimism into our market analysis and scenario forecasts.

Products covered in this Report
This Report examines the market for mortgage advice in the UK. The consumer research focuses on advice for residential mortgages and not buy-to-let or other specialist types of lending. 

The FCA classifies mortgage and remortgage sales by channel (direct or intermediary) and by whether or not advice was given. Definitions are as follows: 

●	Advised sale – this occurs when an adviser of a regulated firm gives a personal recommendation to the customer after assessing the customer’s needs and circumstances. This relates to specific and individual advice, rather than generic. 
●	Non-advised sale – this occurs when no personal recommendation is made to the customer. The customer may receive generic information on the product to enable them to make an informed decision about whether it meets their own needs and circumstances. This category includes ‘execution only’ and ‘direct offer’ transactions.

Other definitions: 

●	Mortgage – a loan for house purchase secured against the property. This category encompasses loans for first-time buyers (including shared-ownership and guarantor mortgages), loans for home movers and loans for buy-to-let and second home purchases.
●	Remortgage – this is where a mortgage borrower redeems his/her existing mortgage with their current lender and takes out a new mortgage on the same property with a different lender.
●	Online mortgage broker – a broker that conducts the mortgage search and at least some of the application process online.