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Mortgages - Intermediary Focus - UK - April 2013

INTRODUCTION
Market definitions
Abbreviations
EXECUTIVE SUMMARY
The market
For now the threat from direct sales remains
Figure 1: Proportional distribution of regulated mortgage sales, by channel, 2007/08-2012/13
Market factors
Number of intermediary products increases
Figure 2: Avelo Product Index, average number of intermediary products available, April 2007-February 2013
Companies and key players
Number of advice firms continues to fall
Figure 3: Number of directly authorised firms in the mortgage intermediary sector, September 2006-September 2012
The adviser
Cautiously optimistic about the future
Figure 4: Expected change in intermediary annualised income over the next three and 12 months, January 2013
Advisers are spending more time with clients
Figure 5: The effect that market conditions have had on the time that intermediaries spend with each client, January 2013
Direct lenders still seen as a challenge to intermediaries
Figure 6: Challenges faced by mortgage intermediaries, January 2013
Developing cross-sales is a main priority
Figure 7: Intermediary priorities for the next six months, January 2013
The consumer
Consumers use a mix of resources in arranging their mortgage
Figure 8: Sources of advice and information likely to use when researching/arranging a mortgage, December 2012
Consumers are self-sufficient in undertaking their own research, but still need the reassurance of intermediaries
Figure 9: Mortgage application expectations and intentions, December 2012
What we think
ISSUES IN THE MARKET
Who will win the battle between direct lenders and intermediaries?
How can intermediaries demonstrate their value in the mortgage market?
Can aggregators work with intermediaries?
Will there be a move from face-to-face to remote advice?
TREND APPLICATION
Advisers can take the hassle out of buying a home
Target future first-time buyers
Mintel Futures: Generation Next
MARKET DRIVERS – BROADER MARKET ISSUES
Key points
Consumer confidence remains low
Figure 10: GfK NOP Consumer Confidence Index, January 2007-December 2012
Property prices flat line
Figure 11: Annual house price growth in the UK – comparison of four different sources, Q1 2007-Q3 2012
Upward swing in buying intentions
Figure 12: Expected mortgage and property purchase activity, Q3/Q4 2002-Q3/Q4 2012
Mortgage rates remain separated from the Bank of England base rate
Figure 13: Bank of England base rate, three-month (monthly average) LIBOR and new mortgage effective rate, January 2006-January 2013
Monthly mortgage approvals remain flat
Figure 14: Number of monthly mortgage approvals (seasonally adjusted), by type, January 2009-December 2012
Number of repossessions continues to fall
Figure 15: Mortgage arrears and repossessions, Q1 2009-Q4 2012
Buy-to-let continues to outperform, but the gap has narrowed over 2012
Figure 16: Annual percentage change in gross advances – buy-to-let versus total mortgage market, 2002-12
MARKET DRIVERS – INTERNAL MARKET ISSUES
Key points
Number of direct products continues to rise
Figure 17: Avelo Product Index, average number of direct products available, April 2007-February 2013
Number of intermediary products increasing slightly, but nowhere near 2007 highs
Figure 18: Avelo Product Index, average number of intermediary products available, April 2007-February 2013
Only half of direct sales are advised
Figure 19: Advised sales, by selling channels, April 2011-March 2012
The Mortgage Market Review
Government help to kick-start the mortgage market
The Funding For Lending Scheme
Help to Buy scheme
SWOT ANALYSIS
Figure 20: SWOT Analysis, mortgage intermediary market, 2013
LENDING MARKET OVERVIEW
Key points
Little change in gross and net advances in 2012
Figure 21: Total mortgage lending, by gross and net advances (not seasonally adjusted), 2006-12
House purchasing increased in 2012, but remortgaging activity fell by 13%
Figure 22: Gross mortgage lending, by type of loan, 2006-12
First-time buyer loans reach their highest level since 2007
Figure 23: Loans advanced for house purchase, by type of borrower, 2006-12
Buy-to-let continues to grow
Figure 24: Number and value of new BTL mortgages sold, 2004-12
INTERMEDIARY SHARE OF THE MORTGAGE MARKET
Key points
Intermediaries slightly increase their proportion of mortgage sales
Figure 25: Proportional distribution of regulated mortgage sales, by channel, 2007/08-2012/13
MORTGAGE INTERMEDIARY MARKETPLACE
Key points
The number of mortgage intermediaries continues to fall
Figure 26: Number of directly authorised firms in the mortgage intermediary sector, September 2006-September 2012
Sole traders and partnerships feel the strain
Figure 27: Number of mortgage and home finance ARs and DA intermediary firms, by type, September 2008-September 2012
COMPANY PROFILES
Intrinsic Financial Services
Figure 28: Key financial data for Intrinsic Financial Services, 2010 and 2011
Legal & General
Figure 29: Key financial data for Legal & General (housing and protection business segment), 2011 and 2012
Tenet
Openwork
Figure 30: Key financial data for Openwork, 2010 and 2011
Personal Touch Financial Services
Figure 31: Key financial data for Personal Touch Financial Services, 2010 and 2011
Sesame Bankhall
Figure 32: Key financial data for Sesame Bankhall Group, 2010 and 2011
BRAND COMMUNICATION AND PROMOTION
Key points
Advertising budgets have improved, but are a long way off pre-2009 figures
Figure 33: Amount spent on advertising in the mortgage intermediary sector, 2008-12
Top five advertisers made up two thirds of expenditure in 2012
Figure 34: Top ten advertisers in the mortgage intermediary market, 2010-12
Internet advertising to mortgage intermediaries has almost doubled since 2011
Figure 35: Advertising channels in the mortgage intermediary sector, 2011 and 2012
Websites becoming a favoured form of advertising to intermediaries
Figure 36: Top ten advertising media used by the mortgage intermediary sector, 2012
A note on adspend
THE ADVISER OUTLOOK
Key points
Advisers are cautiously optimistic about the future income
Figure 37: Adviser expectations of change in income over next three months and 12 months, January 2013
Intermediaries cite clients remortgaging to get more competitive rates as a key reason for growth
The slow mortgage market is the main cause for concern
Advisers’ cautiously optimistic outlook is similar to last year’s
Figure 38: Adviser expectations of change in income over next three months and 12 months, January 2012
THE ADVISER – TIME SPENT WITH CLIENTS
Key points
Mortgage advisers are spending more time with their clients
Figure 39: How the time intermediaries spend with their clients has changed, January 2013
THE ADVISER – CHALLENGES AND PRIORITIES IN THE MORTGAGE INTERMEDIARY MARKET
Key points
Competition from direct lenders remains a challenge, according to 43% of intermediaries
Figure 40: Challenges facing mortgage intermediaries, January 2013
Difficult economic conditions for first-time buyers seen as a challenge for advisers
Advisers do not see the rise of online comparison sites as a challenge
Almost half of advisers see developing cross-sales as their main priority
Figure 41: Mortgage intermediary priorities for next six months, January 2013
Increasing marketing activity is a priority for almost 40% of advisers
Few advisers planning to invest in new technology
THE CONSUMER – MORTGAGE ARRANGEMENT PREFERENCES
Key points
Online sources are gaining popularity
Figure 42: Sources that consumers are likely to use when researching or arranging a mortgage, December 2012
Consumers are more likely to turn to advisers in their own bank as a first port of call
Consumers are likely to use a mix of sources when arranging their mortgage
Price comparison sites are key for remortgage customers
Figure 43: Sources that consumers are likely to use, by mortgage application intentions, December 2012
FTBs to look to their own bank/building society and the internet
THE CONSUMER – ATTITUDES TOWARDS APPLYING FOR A MORTGAGE
Key points
Almost half undertake their own research to find the best deal
Figure 44: Mortgage application expectations and intentions, December 2012
A third of consumers need advice in order to apply for a mortgage
Consumers are less likely to expect advice when remortgaging
Figure 45: Agreement with statements relating to arranging a mortgage/remortgage, by type of mortgage customer, December 2012
Experienced consumers are the least trusting of bank-based advisers
Bank/building society mortgage advisers are less trusted
Figure 46: Agreement with statements concerning trust in advisers, December 2012
Self-sufficient consumers research the best deals before going directly to the lender
Figure 47: Agreement with statements relating to arranging a mortgage/remortgage, by sources likely to use, December 2012
Consumers that use friends and family expect to need professional advice
Intermediaries used to take the hassle out of applying for a mortgage
APPENDIX – MARKET BACKGROUND
Different types of mortgage advisers
APPENDIX – CONSUMERS ARRANGEMENT PREFERENCES
Figure 48: Most popular mortgage research, by demographics, November 2012
Figure 49: Next most popular mortgage research, by demographics, November 2012
APPENDIX – CONSUMER ATTITUDES TOWARDS APPLYING FOR A MORTGAGE
Figure 50: Most popular attitudes towards applying for a mortgage, by demographics, November 2012
Figure 51: Next most popular attitudes towards applying for a mortgage, by demographics, November 2012

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