Table of Contents
Executive Summary
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- The market
- Gross mortgage advances increased in 2013 and will continue to grow
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- Figure 1: Forecast of gross mortgage lending, 2008-18
- First-time buyers driving growth of house purchase loans
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- Figure 2: Loans advanced for house purchase, by type of borrower, 2006-13
- Market factors
- MMR comes into force in April 2014
- Help to Buy proving beneficial for first-time buyers
- Funding for Lending Scheme scaled back from February 2014
- BoE base rate remains at historical low but will go up in the near future
- Repossessions and arrears down in 2013
- House prices showing strong growth
- Companies, brands and innovation
- Lloyds Banking Group leads the way in gross mortgage advances
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- Figure 3: Top six mortgage lenders, by gross advances, 2013
- Nationwide leads the way on trust
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- Figure 4: Attitudes towards and usage of brands operating in the mortgages sector, December 2013
- The consumer
- Mortgage ownership
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- Figure 5: Mortgage ownership, December 2013
- Type of mortgage held
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- Figure 6: Type of mortgage held, December 2013
- Consumer mortgaging and re-mortgaging intentions
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- Figure 7: Mortgaging and re-mortgaging intentions over the next 12 months, December 2013
- Consumer preferences for arranging mortgages
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- Figure 8: Preferred methods of mortgage arrangement, December 2013
- Attitudes towards Help to Buy
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- Figure 9: Attitudes towards the Help to Buy scheme, December 2013
- Consumer attitudes towards house prices
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- Figure 10: Consumer attitudes towards house prices, December 2013
- Consumer attitudes towards fixed-rate mortgages
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- Figure 11: Consumer attitudes towards fixed-rate mortgages, December 2013
- Consumer attitudes towards mortgage repayments
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- Figure 12: Consumer attitudes towards mortgage repayments, December 2013
- What we think
Issues and Insights
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- Capitalising on low interest rates to promote long-term fixed products
- The facts
- The implications
- Customer confusion and dealing with interest-only mortgage clients
- The facts
- The implications
- The MMR and consumer preferences will drive a change in distribution strategies
- The facts
- The implications
Trend Application
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- Taking a smaller hit today
- Skype with your mortgage lender
- Mintel futures: Generation Next
Market Drivers
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- Key points
- MMR comes into effect in April 2014
- Help to Buy proving a success so far
- Funding for Lending Scheme scaled back from February 2014
- FCA finalises guidance on lender responsibilities for treating interest-only customers fairly
- BoE base rate remains at historical low but will go up in the near future
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- Figure 13: Bank of England base rate, three-month (monthly average) LIBOR and effective new mortgage rate, January 2007-December 2013
- Housing transactions up by 15% in 2013
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- Figure 14: Number of UK residential property transactions with a value of £40,000 upwards – seasonally adjusted, Q1 2007-Q4 2013
- Homebuilding levels remain well below their peak
- Economic developments and consumer sentiment
- Mortgage approvals show consecutive quarterly growth in 2013
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- Figure 15: Number of quarterly mortgage approvals (seasonally adjusted), by type, Q1 2007-Q4 2013
- Repossessions and arrears down in 2013
- Average house prices show strong growth in 2013
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- Figure 16: Annual change in average UK house price – comparison of four sources, Q1 2007-Q4 2013
SWOT Analysis
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- Figure 17: UK mortgage market, SWOT analysis, 2014
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Who’s Innovating?
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- Key points
- Halifax offers to pay 1% stamp duty for first-time buyers
- Leeds Building Society offers clients the chance to defer first six months interest payments
- Help to Buy leads to increased competition in the 95% LTV market
- The Bank of Mum and Dad
Market Size and Forecast
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- Key points
- Gross mortgage lending up by 21% in 2013
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- Figure 18: Total secured lending, by gross and net advances (not seasonally adjusted), 2007-13
- Market forecast
- Gross mortgage lending expected to increase over the next 5 years
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- Figure 19: Forecast of gross mortgage lending, 2008-18
- Figure 20: Forecast of gross mortgage lending, at current and constant prices, 2008-18
- Forecast methodology
- Fan chart explanation
Segment Performance
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- Key points
- Banks account for the lion’s share of mortgage lending
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- Figure 21: Gross mortgage lending, by type of lender (not seasonally adjusted), 2007-13
- All types of mortgage advances increased in 2013
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- Figure 22: Gross mortgage lending, by type of loan, 2006-13
- First-time buyers driving growth of house purchase loans
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- Figure 23: Loans advanced for house purchase, by type of borrower, 2006-13
Market Share
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- Key points
- Lloyds Banking Group leads the way in gross mortgage lending
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- Figure 24: Top six mortgage lenders, by gross advances, 2011-13
Companies and Products
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- Barclays
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- Figure 25: Key annual financial data for Barclays PLC, 2012 and 2013
- HSBC
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- Figure 26: Key annual financial data for HSBC Bank PLC, 2012 and 2013
- Lloyds Banking Group
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- Figure 27: Key annual financial data for Lloyds Banking Group, 2012 and 2013
- Nationwide
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- Figure 28: Key annual financial data for Nationwide Building Society, 2011/12 and 2012/2013
- RBS/NatWest
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- Figure 29: Key annual financial data for RBS Group, 2012 and 2013
- Santander
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- Figure 30: Key annual financial data for Santander UK, 2012 and 2013
Brand Communication and Promotion
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- Key points
- Mortgage advertising almost doubled in 2012/13
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- Figure 31: Total advertising expenditure on mortgage products and services, 2008/09-2012/13
- Two thirds of advertising expenditure are focused on brand building
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- Figure 32: Advertising expenditure on mortgage products and services, by sub-category, 2008/09-2012/13
- Top five advertisers account for 70% of advertising expenditure
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- Figure 33: Advertising expenditure on mortgage products and services (excluding equity release), by top 15 advertisers, 2012/11-2012/13
- Television and press advertising most widely used channels
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- Figure 34: Proportional distribution or mortgage adspend (excluding equity release), by media type, 2010/11-2012/13
- A note about adspend
Brand Research
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- Brand map
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- Figure 35: Attitudes towards and usage of brands operating in the mortgages sector, December 2013
- Correspondence analysis
- Brand attitudes
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- Figure 36: Attitudes, by brands operating in the mortgages sector, December 2013
- Brand personality
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- Figure 37: Personality of brands operating in the mortgages sector – macro image, December 2013
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- Figure 38: Personality of brands operating in the mortgages sector – micro image, December 2013
- Brand experience
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- Figure 39: Usage of brands operating in the mortgages sector, December 2013
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- Figure 40: Satisfaction with various brands operating in the mortgages sector, December 2013
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- Figure 41: Consideration of brands operating in the mortgages sector, December 2013
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- Figure 42: Consumer perceptions of current performance of brands operating in the mortgages sector, December 2013
- Brand recommendation
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- Figure 43: Recommendation of brands operating in the mortgages sector, December 2013
- Target group analysis
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- Figure 44: Target groups, December 2013
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- Figure 45: Mortgages brand usage, by target groups, December 2013
- Group One – Conformists
- Group Two – Simply the Best
- Group Three – Shelf Stalkers
- Group Four – Habitual Shoppers
- Group Five – Individualists
Channels to Market
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- Key points
- Sales split evenly between intermediated and direct channels
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- Figure 46: Proportional distribution of regulated mortgage sales, by channel, 2008/09-2012/13
- Around three quarters of mortgages are sold on an advised basis
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- Figure 47: Distribution of regulated mortgage sales, advised versus non-advised, 2008/09-2012/13
Mortgage Ownership
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- Key points
- Some 35% of UK adults have a mortgage on their home
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- Figure 48: Mortgage ownership, December 2013
- Bell-shaped distribution of mortgage ownership when it comes to age
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- Figure 49: Mortgage ownership, by age, December 2013
- Household income is influential in mortgage ownership
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- Figure 50: Mortgage ownership, by gross annual household income, December 2013
- Married couples and those with children more likely to have a mortgage
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- Figure 51: Mortgage ownership, by gross annual household income, December 2013
Type of Mortgage Held
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- Key points
- Around two fifths have a variable rate or tracker mortgage
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- Figure 52: Type of mortgage held, December 2013
- Consumer confusion about interest-only mortgages
- Confusion is more pronounced among younger adults
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- Figure 53: Ownership of interest-only and variable/tracker mortgages, by age, December 2013
Developments in the Interest-Only Mortgage Market
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- Key points
- One in two adults saving to repay the capital on their interest-only mortgage
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- Figure 54: Consumers with interest-only mortgages and market developments, December 2013
- Adults aged 18-34-years-old much more likely to be looking at switching to repayment products
- People who had had contact from their lender are much more engaged
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- Figure 55: Consumers with interest-only mortgages and market developments, by consumers with interest-only mortgages and market developments, December 2013
Consumer Mortgaging and Re-Mortgaging Intentions
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- Key points
- Around a fifth of adults are considering a mortgage/re-mortgage
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- Figure 56: Mortgaging and re-mortgaging intentions over the next 12 months, December 2013
- Mortgaging intentions are highest among 25-34-year-olds
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- Figure 57: Mortgaging and re-mortgaging intentions over the next 12 months, by age, December 2013
- Londoners are more likely to be active in the mortgage market over the next year
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- Figure 58: Mortgaging and re-mortgaging intentions over the next 12 months, by region, December 2013
- Household financial situation drives mortgaging intentions
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- Figure 59: Mortgaging and re-mortgaging intentions over the next 12 months, by current financial situation compared to a year ago, December 2013
Consumer Preferences for Arranging Mortgages
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- Key points
- Consumers still show preference towards face-to-face sales
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- Figure 60: Preferred methods of mortgage arrangement, December 2013
- Almost a third would be comfortable with a fully digitalised process
- Home movers most likely to want online process for mortgage applications
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- Figure 61: Preferred methods of mortgage arrangement, by mortgaging and re-mortgaging intentions over the next 12 months, December 2013
- Face-to-face more appealing to those with variable rate/tracker products
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- Figure 62: Preferred methods of mortgage arrangement, by type of mortgage held, December 2013
Attitudes Towards Help to Buy
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- Key points
- A fifth of adults would be interested in using the Help to Buy scheme
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- Figure 63: Attitudes towards the Help to Buy scheme, December 2013
- Younger adults are more interested in the Help to Buy scheme
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- Figure 64: Agreement with the statement ‘I would be interested in making of this scheme in the future’, by age, December 2013
- Adults with children aged 0-4-years-old could use Help to Buy to upscale
- Help to Buy encourages optimism about future mortgaging activity
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- Figure 65: Mortgage and re-mortgaging intentions over the next 12 months, by attitudes towards the help-to-buy scheme, December 2013
Consumer Attitudes Towards House Prices
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- Key points
- The majority of home owners feel that property is a good investment
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- Figure 66: Consumer attitudes towards house prices, December 2013
- Interest-only mortgage holders more dependent on rising house prices
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- Figure 67: Consumer attitudes towards house prices, by interest only mortgage holders who agree with the statement ‘I am hoping that house prices will rise enough so that I can downsize and pay off my mortgage’, December 2013
- Prospective first-time buyers less enthusiastic about increasing house prices
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- Figure 68: Consumer attitudes towards house prices, by first-time buyer mortgaging intentions, December 2013
Consumer Attitudes Towards Fixed-Rate Mortgages
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- Key points
- Strong interest for long term fixed rate products
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- Figure 69: Consumer attitudes towards fixed-rate mortgages, December 2013
- Lenders need to convince variable/tracker product holders to switch
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- Figure 70: Agreement with the statement ‘It is a good idea to switch to a fixed-rate mortgage now as rates will only go up’, by type of mortgage held, December 2013
- First-time buyers are less interested in long-term fixed rate products
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- Figure 71: Agreement with the statements ‘I would be interested in mortgage products which have a fixed rate for 10+ years’, by mortgaging and re-mortgaging intentions, December 2013
Consumer Attitudes Towards Mortgage Repayments
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- Key points
- Over two fifths do not think they would be able to get a new mortgage or re-mortgage
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- Figure 72: Consumer attitudes towards mortgage repayments, December 2013
- Improvements in household finances drives overpayment intentions
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- Figure 73: Agreement with the statement ‘I am planning to make overpayments on my mortgage during the next 12 months’, by current financial situation compared to a year ago, December 2013
- Two fifths of variable/tracker rate mortgage holders are concerned about rising interest rates
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- Figure 74: Agreement with the statement ‘I would struggle to meet my mortgage repayments if interest rates increased’, by type of mortgage held, December 2013
Appendix – Market Drivers
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- Figure 75: GFK NOP Consumer Confidence Barometer January 1989-February 2014
- Figure 76: UK households, by size, 2008-18
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Appendix – Market Size and Forecast
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- Figure 77: Best and worst case forecast of gross mortgage lending, 2013-18
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Appendix – Brand Research
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- Figure 78: Brand usage, December 2013
- Figure 79: Brand commitment, December 2013
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- Figure 80: Brand momentum, December 2013
- Figure 81: Brand diversity, December 2013
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- Figure 82: Brand satisfaction, December 2013
- Figure 83: Brand recommendation, December 2013
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- Figure 84: Brand attitude, December 2013
- Figure 85: Brand image – macro image, December 2013
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- Figure 86: Brand image – micro image, December 2013
- Figure 87: Profile of target groups, by demographics, December 2013
- Figure 88: Psychographic segmentation, by target groups, December 2013
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- Figure 89: Brand usage, by target groups, December 2013
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Appendix – Mortgage Ownership
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- Figure 90: Mortgage ownership, by demographics, December 2013
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Appendix – Type of Mortgage Held
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- Figure 91: Nets of type of mortgage held, by demographics, December 2013
- Figure 92: Type of mortgage held, by demographics, December 2013
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Appendix – Developments in the Interest-Only Mortgage Market
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- Figure 93: Interest-only mortgage developments – I am hoping that house prices will rise enough so that i can downsize and pay off my mortgage, by demographics, December 2013
- Figure 94: Interest-only mortgage developments – I am saving/investing so that i can repay the capital at the end of my mortgage term, by demographics, December 2013
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- Figure 95: Interest-only mortgage developments – My mortgage provider/lender has contacted me to discuss my plans and savings for repaying the capital, by demographics, December 2013
- Figure 96: Interest-only mortgage developments – I am planning to downsize at the end of my mortgage term so i am not worried about being able to repay all of the capital on my home, by demographics, December 2013
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- Figure 97: Interest-only mortgage developments – I worry that i am not going to have enough savings to repay the outstanding capital at the end of my mortgage term, by demographics, December 2013
- Figure 98: Interest-only mortgage developments – I am looking to switch to a repayment mortgage, by demographics, December 2013
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Appendix – Consumer Mortgaging and Re-Mortgaging Intentions
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- Figure 99: Mortgaging and re-mortgaging intentions, by demographics, December 2013
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Appendix – Consumer Preferences for Arranging Mortgages
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- Figure 100: Preferred methods of mortgage arrangement, by demographics, December 2013
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Appendix – Attitudes Towards Help to Buy
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- Figure 101: Attitudes towards the help-to-buy scheme, by demographics, December 2013
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Appendix – Consumer Attitudes Towards House Prices
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- Figure 102: Agreement with the statement ‘Buying property is a good long-term investment’, by demographics, December 2013
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- Figure 103: Agreement with the statement ‘An increase in house prices increases my confidence in the economy’, by demographics, December 2013
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- Figure 104: Agreement with the statement ‘An increase in house prices makes me feel more financially secure’, by demographics, December 2013
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Appendix – Consumer Attitudes Towards Fixed-Rate Mortgages
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- Figure 105: Agreement with the statement ‘I would be interested in mortgage products which have a fixed rate for 10+ years’, by demographics, December 2013
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- Figure 106: Agreement with the statement ‘It is a good idea to switch to a fixed-rate mortgage now as rates will only go up’, by demographics, December 2013
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Appendix – Consumer Attitudes Towards Mortgage Repayments
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- Figure 107: Agreement with the statement ‘I do not think that i would be able to get a new mortgage/re-mortgage at the moment’, by demographics, December 2013
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- Figure 108: Agreement with the statement ‘I would struggle to meet my mortgage repayments if interest rates increased^’, by demographics, December 2013
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- Figure 109: Agreement with the statement ‘I am planning to make overpayments on my mortgage during the next 12 months^’, by demographics, December 2013
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