Table of Contents
Overview
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- What you need to know
- Report coverage and product definitions
Executive Summary
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- The market
- Intermediaries transact the lion’s share of mortgage business
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- Figure 1: Number of regulated residential mortgage sales, by sales channel, 2013-18
- Slowdown in mortgage lending anticipated
- Brexit delay heightens risk of a downturn
- Regulatory update: Mortgage Market Study
- Companies and brands
- A heavily fragmented market
- PRIMIS is now the second-largest network, by number of ARs
- Countrywide is the UK’s largest broker
- The rise of the online broker
- The consumer
- Strong consumer appetite for home finance
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- Figure 2: Expected mortgage-related borrowing activity over the coming year, by tenure, December 2018
- More mortgage borrowers prefer to do their own research than rely on an adviser
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- Figure 3: Preferred way of arranging a mortgage/remortgage, by key target groups, December 2018
- Face to face is the preferred channel for mortgage advice
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- Figure 4: Most preferred way of receiving mortgage advice, by key target groups, December 2018
- Low awareness of online broker brands among all homeowners
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- Figure 5: Awareness of selected online mortgage brokers, by key target groups, December 2018
- Two thirds of prospective borrowers would consider using an online broker
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- Figure 6: Consideration of online brokers and familiarity with ‘robo-advice’ concept, by key target groups, December 2018
- What we think
Issues and Insights
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- Mortgage advice channels viewed differently by existing mortgage holders and prospective first-time buyers
- The facts
- The implications
- Online brokers can gain customers with the promise of free and fast services
- The facts
- The implications
The Market – What You Need to Know
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- Total mortgage lending grew by 5% in 2018
- Intermediary share of new lending reached 72% in 2018
- Regulator says market is working well but falls short of its vision
- Brexit delay increases the chance of market downturn
Market Size – New Mortgage Lending
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- Lenders and mortgage intermediaries see strong remortgage activity
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- Figure 7: Volume of residential and buy-to-let mortgage sales, by purpose of loan, 2013-18
- Buy-to-let sees a small pick-up in sales, but pressures remain
- Remortgage business was worth £85 billion in 2018
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- Figure 8: Value of residential and buy-to-let mortgage sales, by purpose of loan, 2013-18
- Market outlook: slower growth expected
Mortgage Sales by Channel and Advice Given
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- The vast majority of mortgage sales are advised…
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- Figure 9: Number of regulated residential mortgage sales, by advice given, 2013-18
- …and a large and growing proportion are intermediated
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- Figure 10: Number of regulated residential mortgage sales, by sales channel, 2013-18
Market Drivers
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- FCA assesses impact of MMR…
- …and believes further improvements could be made
- Industry bodies warn against putting too much focus on price alone
- Large target audience for mortgage advice
- Government intervention has helped stop the decline in home ownership
- Increased popularity of short-term deals drives remortgage activity
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- Figure 11: When current mortgage deal is due to expire (fixed-rate mortgage holders only), December 2018
- Brexit delay increases risk of a market downturn
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- Figure 12: Economic and housing market indicators (actual and predicted), 2018-20
- Established brokers also face growing threat from online challengers
Companies and Brands – What You Need to Know
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- A heavily fragmented market
- PRIMIS is now the second-largest network, by number of ARs
- Countrywide is the UK’s largest mortgage broker
- Mortgage advice is going digital
Market Composition and Key Players
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- 5,000 DA firms and over 14,000 ARs advise on regulated mortgage contracts
- Largest national brokers
- Largest networks
- Largest lenders
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- Figure 13: Top 10 mortgage lenders, by gross lending, 2017
- Banking sector channels
Digital Strategy and Innovation
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- Lenders respond to changing customer habits with on-demand solutions
- L&C adopts hybrid digital proposition
- Who are the challenger brokers?
- Trussle
- Habito
- MortgageGym
- Mojo Mortgages
- Others
- What’s happened to Dynamo?
The Consumer – What You Need to Know
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- Strong consumer appetite for home finance
- Many mortgage borrowers like to do their own research
- Face to face is the preferred channel for mortgage advice
- Low awareness of online broker brands among all homeowners
- Two thirds of prospective borrowers would consider using an online broker
Expected Mortgage-related Activity in 2019
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- Around a quarter of UK adults have a mortgage
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- Figure 14: Segmentation of total sample, by housing situation, December 2018
- 19% of mortgage holders expect to remortgage within the next 12 months
- 8% of outright owners are planning to take out a home mover loan
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- Figure 15: Expected mortgage-related borrowing activity over the coming year, by tenure, December 2018
- 22% of private renters have aspirations to take out a mortgage
Preferred Method of Arranging a Mortgage
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- More mortgage holders prefer to select a product themselves than use a broker...
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- Figure 16: Preferred way of arranging a mortgage or remortgage, by key target groups, December 2018
- …but preferences are more evenly split among prospective mortgage customers
- Price comparison sites are a handy tool for those who know what they want…
- …but online brokers offer the same and more
- Most advice seekers prefer to converse face to face…
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- Figure 17: Ways willing to receive mortgage advice (ranked in order of significance), by key target groups, December 2018
- …with 69% saying this is their most preferred channel
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- Figure 18: Most preferred way of receiving mortgage advice (ranked in order of significance), by key target groups, December 2018
Awareness of Online Brokers
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- Awareness is limited among wider mortgage-owning population…
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- Figure 19: Awareness of selected online mortgage brokers (ranked in order of most well known), by key target groups, December 2018
- …but higher among prospective remortgagors and new mortgage customers
- Trussle has work to do to catch up with rivals
Online Advice – Assessing Attitudes and Potential
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- Around two thirds of prospective applicants could be tempted to consider online brokers…
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- Figure 20: Consideration of online brokers and familiarity with ‘robo-advice’ concept, by key target groups, December 2018
- …but a third would prefer to deal with a person
Appendix – Data Sources and Abbreviations
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- Abbreviations
- Consumer research methodology
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