Table of Contents
Executive Summary
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- The market
- Gross mortgage lending expected to reach £336 billion in 2020
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- Figure 1: Forecast of gross mortgage lending, 2010-20
- Companies and brands
- Smaller lenders make good progress but traditional names dominate
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- Figure 2: Leading residential mortgage providers, market share by gross new mortgage lending, 2015
- Traditional banks succeed despite profiteering image
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- Figure 3: Attitudes towards and usage of selected finance brands, November 2015
- The consumer
- A third of people hold a mortgage on their main home
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- Figure 4: Mortgage ownership, December 2015
- Expectation of a rise in interest rates have driven fixed-rate mortgage sales in the last year
- Fear of interest rate rise encourages uptake of fixed rate mortgages
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- Figure 5: Type of mortgage held, December 2015
- Few are confident that their mortgage is the best option for them
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- Figure 6: Satisfaction with current mortgage product and provider, December 2015
- Interest in overpayment indicates growing confidence
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- Figure 7: Interest in features of a new mortgage product, December 2015
- 39% of renters don’t think they’ll ever be able to afford their own home
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- Figure 8: Attitudes towards property ownership and mortgages, December 2015
- What we think
Issues and Insights
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- Mortgage lending must adapt to meet an aging population
- The facts
- The implications
- Customers could be exposed by changes in interest rates
- The facts
- The implications
- Do mortgages and mobile technology really mix?
- The facts
- The implications
The Market – What You Need to Know
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- Gross mortgage lending to build momentum in 2016
- Housebuilding continues to fall short
- Broker channel dominates following MMR
Market Size and Forecast
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- Gross mortgage lending accelerated through 2015
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- Figure 9: Gross mortgage lending, not seasonally adjusted, 2011-15
- Figure 10: Quarterly gross mortgage lending, not seasonally adjusted, 2013-15
- Gross mortgage lending expected to reach £336 billion in 2020
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- Figure 11: Forecast of gross mortgage lending, 2010-20
- Figure 12: Forecast of gross mortgage lending, at current and constant prices, 2009-19
- Forecast methodology
Market Segmentation
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- Re-mortgages recover after suffering under MMR
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- Figure 13: Value of new mortgages by purpose of loan, not seasonally adjusted, 2011-15
- Figure 14: Number of new mortgages by purpose of loan, not seasonally adjusted, 2011-15
Market Drivers
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- House price growth shows signs of cooling
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- Figure 15: Annual change in average UK house prices – Comparison of four sources, Q1 2008-Q3 2015
- Low interest rates continue to support mortgage ownership
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- Figure 16: Monthly interest rate of UK monetary financial institutions (excluding Central Bank) for 2 year variable rate mortgage at 75% loan to value, 2 year fixed-rate mortgage at 75% loan to value and standard variable rate (SVR), January 2010-February 2016
- Housebuilding has recovered but must grow further
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- Figure 17: Number of permanent dwellings started and completed, 2007-08/2014-15
- MMR rules have reshaped the market in favour of advice
- European Union Mortgage Credit Directive burden for second mortgage providers
Channels to Market
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- Broker channel takes precedence following the MMR…
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- Figure 18: Distribution of regulated mortgage sales, direct versus intermediated, 2009/10-2014/15
- …and almost all mortgage sales are now advised
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- Figure 19: Distribution of regulated mortgage sales, advised versus non-advised, 2009/10-2014/15
Key Players – What You Need to Know
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- Smaller lenders make good progress but traditional names dominate
- Building societies push to differentiate from banks
- Lenders look to sweeten the deal beyond the interest rate
Market Share
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- Smaller lenders make good progress but traditional names dominate
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- Figure 20: Selected mortgage providers, market share by gross new mortgage lending, 2015
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- Figure 21: Selected mortgage providers, market share by gross new mortgage lending, 2013-15
Brand Research
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- What you need to know
- Brand map
- Post Office and Nationwide lead on trust
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- Figure 22: Attitudes towards and usage of selected finance brands, November 2015
- Key brand metrics
- Nationwide also leads on offering an excellent experience
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- Figure 23: Key metrics for selected finance brands, November 2015
- Brand attitudes: Traditional banks cluster around good quality and customer service
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- Figure 24: Attitudes, by brand, November 2015
- Brand personality: Santander advertising promotes fun and vibrancy
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- Figure 25: Brand personality – Macro image, November 2015
- HSBC, Barclays and Lloyds seen as impersonal
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- Figure 26: Brand personality – Micro image, November 2015
- Brand analysis
- Traditional banks succeed despite profiteering image
- Nationwide and Halifax take strength from fair and progressive image
- The Post Office is unbeatable for awareness and reputation
- Co-op suffers from recent poor press
Competitive Strategies
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- Help to Buy ISA presents opportunity for early engagement with savers
- Halifax
- Santander
- The rest of the market
- Lenders offer sweeteners to compete beyond rates
- Nationwide
- Halifax
- Virgin Money
- Barclays
Advertising and Marketing Activity
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- TV advertising is extended to capture the growing first-time buyer market
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- Figure 27: Above-the line, online display and direct mail advertising expenditure on mortgages, 2013-15
- Brand building dominates advertising spend
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- Figure 28: Above-the line, online display and direct mail advertising expenditure on mortgages, by product type, 2015
- HM Treasury invests in promoting government schemes
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- Figure 29: Top 20 advertisers for above-the line, online display and direct mail advertising expenditure on mortgages, 2013-15
- Nielsen Media Research coverage
The Consumer – What You Need to Know
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- A third of people hold a mortgage on their main home
- Low interest rates encourage uptake of fixed rate mortgages
- Online research is a crucial starting point for many
- Delivering the flexibility customers want is a challenge for lenders
- Interest in overpayment indicates growing confidence
- 39% of renters don’t think they’ll ever be able to afford their own home
Mortgage Ownership
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- A third of people hold a mortgage on their main home
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- Figure 30: Mortgage ownership, December 2015
- Single people struggle to get on the housing ladder
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- Figure 31: Mortgage ownership, by marital status, December 2015
Type of Mortgage Held
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- Fear of interest rate rise encourages uptake of fixed rate mortgages
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- Figure 32: Type of mortgage held, December 2015
- Over-45s more likely to hold SVR mortgages than younger age groups
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- Figure 33: Type of mortgage held, by age, December 2015
Timing of Last Mortgage Purchase
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- Low interest rate deals have driven fixed-rate mortgage sales in the last year
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- Figure 34: When mortgage was arranged by type of mortgage held, December 2015
- Figure 35: Level of concern about potential interest rate rise in 2016, December 2015
Methods Used for Mortgage-related Activities
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- Online is the most popular research method for mortgage products
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- Figure 36: Methods used for/interested in for researching and arranging a mortgage product, December 2015
- Mortgage holders more likely to go online for straight-forward administration
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- Figure 37: Methods used for/interested in for administrating a mortgage product, December 2015
- Millennial mortgage holders are more interested in mobile management
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- Figure 38: Use/interest in using a smartphone for mortgage-related activities, by age, December 2015
Satisfaction with Current Mortgage Product and Provider
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- Few are confident that their mortgage is the best option for them
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- Figure 39: Satisfaction with current mortgage product and provider, December 2015
- Millennials less likely to be satisfied with provider communications
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- Figure 40: Satisfaction with current mortgage product and provider, December 2015
- Most are happy with only one aspect, showing satisfaction could be broader
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- Figure 41: Number of statements selected indicating satisfaction with current mortgage product and provider, December 2015
Interest in Features of a New Mortgage Product
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- Interest in overpayment indicates growing confidence
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- Figure 42: Interest in features of a new mortgage product, December 2015
- Half of highest earners interested in overpaying
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- Figure 43: Interest in the ability to overpay on a new mortgage product, by gross annual household income, December 2015
Attitudes towards Property Ownership and Mortgages
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- 39% of renters don’t think they’ll ever be able to afford their own home…
- But 28% say that renting is more suited to their lifestyle
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- Figure 44: Attitudes towards property ownership and mortgages, December 2015
- More than half of 45-54s give up on homeownership
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- Figure 45: Attitudes towards property ownership and mortgages, by age, December 2015
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 46: Best and worst case forecast of gross mortgage lending, 2015-20
- Forecast methodology
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