Table of Contents
Overview
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- What you need to know
Executive Summary
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- The market
- Mortgage advice accounts for almost all new mortgages
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- Figure 1: Distribution of regulated mortgage sales, advised versus non-advised, 2011/12-2015/16
- Gross mortgage lending is forecast to grow to £271 billion by 2021
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- Figure 2: Forecast of gross mortgage lending, 2011-21
- The consumer
- 34% of adults have a mortgage
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- Figure 3: Mortgage ownership, December 2016
- Banks still regarded as first port of call for mortgage advice
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- Figure 4: Main source of advice for most recent mortgage, December 2016
- 92% were satisfied with their most recent experience with an adviser
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- Figure 5: Satisfaction with last mortgage advice received, December 2016
- Cost is key to choosing an adviser
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- Figure 6: Important factors when choosing a mortgage advice provider, December 2016
- Preference for face-to-face advice could hold back online innovations
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- Figure 7: Attitudes towards mortgage advice, December 2016
- A significant minority are unconvinced about the benefits of advice
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- Figure 8: Attitudes towards mortgage advice, December 2016
- What we think
Issues and Insights
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- Consumers need to be shown the benefits of advice
- The facts
- The implications
- Automation has a long way to go
- The facts
- The implications
- Transparent pricing is key to improving perception
- The facts
- The implications
The Market – What You Need to Know
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- Mortgage advice accounts for almost all new mortgages
- Gross mortgage lending is forecast to grow to £271 billion by 2021
- Low rates continue to boost the market
The Mortgage Advice Market
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- Mortgage advice covers 97% of the mortgage market…
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- Figure 9: Distribution of regulated mortgage sales, advised versus non-advised, 2011/12-2015/16
- …and grew by 11% in 2015/16
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- Figure 10: Number of regulated mortgage sales, advised versus non-advised, 2013/14-2015-16
- Two thirds of mortgages are sold via intermediaries
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- Figure 11: Distribution of regulated mortgage sales, direct versus intermediary, 2011/12-2015/16
- Figure 12: Number of regulated mortgage sales, direct versus intermediary, 2013/14-2015/16
The Mortgage Market
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- Gross new mortgage lending totalled £245 billion in 2016…
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- Figure 13: Gross mortgage lending, not seasonally adjusted, 2012-16
- …but growth is expected to slow in the next five years
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- Figure 14: Forecast of gross mortgage lending, 2011-21
- Buy-to-let is due to fall in appeal
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- Figure 15: Forecast of new buy-to-let mortgage advances, 2011-21
- Lloyds Banking Group is the UK’s mortgage market leader
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- Figure 16: Selected mortgage providers, market share by gross new mortgage lending, 2016
Market Drivers
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- The housing market has calmed in the last two years
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- Figure 17: Annual change in average UK house prices – ONS and Nationwide house price indices, Q1 2009-Q4 2016
- Low rates boost demand for remortgaging
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- Figure 18: 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-February 2017
- FCA launches market study to assess competition in the mortgage market
Companies and Brands – What You Need to Know
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- Lenders are strengthening their ties to intermediaries…
- …while automation is allowing new challengers to enter the market
Competitive Strategies
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- Major lenders look to increase intermediary presence…
- …and make it easier for consumers to find them
- Automation offers new challengers a route to market
- Retention proc fees introduced across the market
The Consumer – What You Need to Know
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- 34% of adults have a mortgage
- Most used a bank or building society to get their last mortgage advice
- 92% were satisfied with their most recent experience with an adviser
- Cost is key to choosing an adviser
- Preference for face-to-face advice could hold back online innovations
- A significant minority are unconvinced about the benefits of advice
Mortgage Ownership
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- A third of British adults have a mortgage on their main home…
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- Figure 19: Mortgage ownership, December 2016
- …and 10% of non-mortgage holders plan to get one in the next two years
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- Figure 20: Intentions to buy a property in the next two years, December 2016
Main Source of Mortgage Advice
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- Two fifths of mortgage holders took advice from their main bank
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- Figure 21: Main source of advice for most recent mortgage, December 2016
- Suburban and rural groups are more likely to use independent advice
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- Figure 22: Main source of advice for most recent mortgage, by residential area, December 2016
Satisfaction with Mortgage Advice
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- Mortgage advisers achieve impressive satisfaction levels
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- Figure 23: Satisfaction with last mortgage advice received, December 2016
- Bank advisers are most likely to provide very satisfactory service…
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- Figure 24: Satisfaction with last mortgage advice received, by main source of advice for most recent mortgage, December 2016
- …helped by their branch networks
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- Figure 25: Satisfaction with last mortgage advice received, by methods used for/interested in using for seeking advice on the most appropriate mortgage, December 2016
- Better-off consumers are also more satisfied with their mortgage adviser
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- Figure 26: Satisfaction with last mortgage advice received, by current financial situation, December 2016
Factors Affecting Choice of Mortgage Adviser
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- Cost is the key factor in choosing an adviser
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- Figure 27: Important factors when choosing a mortgage advice provider, December 2016
- Online channels are in low demand at present
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- Figure 28: Important channel-related factors when choosing a mortgage advice provider, by age, December 2016
- Recommendations are particularly important for new applicants
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- Figure 29: Important factors when choosing a mortgage advice provider, by mortgage ownership, December 2016
- Speed of service is more important for bank advice users
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- Figure 30: Agreement that “How quickly I can get an appointment” is an important factor when choosing a mortgage advice provider, by main source of advice for most recent mortgage, December 2016
Attitudes towards Mortgage Advice Channels
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- Two thirds would only pay for face-to-face advice…
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- Figure 31: Attitudes towards mortgage advice, December 2016
- …but nearly half are interested in digital advice
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- Figure 32: Interest in receiving mortgage advice via digital channels, by age, December 2016
Attitudes towards Mortgage Advice
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- Aggregators are a threat to mortgage advice
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- Figure 33: Attitudes towards mortgage advice, December 2016
- Independent advisers carry a greater sense of authority
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- Figure 34: Confidence in getting the best mortgage deal without professional advice, by main source of advice for most recent mortgage, December 2016
- Millennials are most likely to consider advice good value for money
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- Figure 35: Agreement with the statement “I think mortgage advisers provide good value for money”, by generation, December 2016
- Young city-dwellers are most concerned about applying directly
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- Figure 36: Attitudes towards mortgage advice – CHAID – Tree output, December 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID Methodology
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- Figure 37: Attitudes towards mortgage advice – CHAID – Table output, December 2016
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