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Mortgage Advice - UK - April 2017

“The mortgage advice market is in a strong position. The MMR means that those looking for a mortgage almost always need to take advice, while the strong demand for mortgages means this captive audience is regularly replenished. However, digital innovation, from both major lenders and disruptive start-ups threaten to put a squeeze on traditional advisers who lack the funds and expertise to compete online.”
– Rich Shepherd, Senior Financial Services Analyst

This report examines the following issues:

  • Consumers need to be shown the benefits of advice
  • Automation has a long way to go
  • Transparent pricing is key to improving perception

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The market
          • Mortgage advice accounts for almost all new mortgages
            • 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
            • Figure 2: Forecast of gross mortgage lending, 2011-21
          • The consumer
            • 34% of adults have a mortgage
              • Figure 3: Mortgage ownership, December 2016
            • Banks still regarded as first port of call for mortgage advice
              • Figure 4: Main source of advice for most recent mortgage, December 2016
            • 92% were satisfied with their most recent experience with an adviser
              • Figure 5: Satisfaction with last mortgage advice received, December 2016
            • Cost is key to choosing an adviser
              • Figure 6: Important factors when choosing a mortgage advice provider, December 2016
            • Preference for face-to-face advice could hold back online innovations
              • Figure 7: Attitudes towards mortgage advice, December 2016
            • A significant minority are unconvinced about the benefits of advice
              • Figure 8: Attitudes towards mortgage advice, December 2016
            • What we think
            • Issues and Insights

              • 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

                                • 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

                                      • Mortgage advice covers 97% of the mortgage market…
                                        • Figure 9: Distribution of regulated mortgage sales, advised versus non-advised, 2011/12-2015/16
                                      • …and grew by 11% in 2015/16
                                        • Figure 10: Number of regulated mortgage sales, advised versus non-advised, 2013/14-2015-16
                                      • Two thirds of mortgages are sold via intermediaries
                                        • 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

                                      • Gross new mortgage lending totalled £245 billion in 2016…
                                        • Figure 13: Gross mortgage lending, not seasonally adjusted, 2012-16
                                      • …but growth is expected to slow in the next five years
                                        • Figure 14: Forecast of gross mortgage lending, 2011-21
                                      • Buy-to-let is due to fall in appeal
                                        • Figure 15: Forecast of new buy-to-let mortgage advances, 2011-21
                                      • Lloyds Banking Group is the UK’s mortgage market leader
                                        • Figure 16: Selected mortgage providers, market share by gross new mortgage lending, 2016
                                    • Market Drivers

                                      • The housing market has calmed in the last two years
                                        • 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
                                        • 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

                                        • Lenders are strengthening their ties to intermediaries…
                                          • …while automation is allowing new challengers to enter the market
                                          • Competitive Strategies

                                            • 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

                                                    • 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

                                                                • A third of British adults have a mortgage on their main home…
                                                                  • Figure 19: Mortgage ownership, December 2016
                                                                • …and 10% of non-mortgage holders plan to get one in the next two years
                                                                  • Figure 20: Intentions to buy a property in the next two years, December 2016
                                                              • Main Source of Mortgage Advice

                                                                • Two fifths of mortgage holders took advice from their main bank
                                                                  • Figure 21: Main source of advice for most recent mortgage, December 2016
                                                                • Suburban and rural groups are more likely to use independent advice
                                                                  • Figure 22: Main source of advice for most recent mortgage, by residential area, December 2016
                                                              • Satisfaction with Mortgage Advice

                                                                • Mortgage advisers achieve impressive satisfaction levels
                                                                  • Figure 23: Satisfaction with last mortgage advice received, December 2016
                                                                • Bank advisers are most likely to provide very satisfactory service…
                                                                  • Figure 24: Satisfaction with last mortgage advice received, by main source of advice for most recent mortgage, December 2016
                                                                • …helped by their branch networks
                                                                  • 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
                                                                  • Figure 26: Satisfaction with last mortgage advice received, by current financial situation, December 2016
                                                              • Factors Affecting Choice of Mortgage Adviser

                                                                • Cost is the key factor in choosing an adviser
                                                                  • Figure 27: Important factors when choosing a mortgage advice provider, December 2016
                                                                • Online channels are in low demand at present
                                                                  • Figure 28: Important channel-related factors when choosing a mortgage advice provider, by age, December 2016
                                                                • Recommendations are particularly important for new applicants
                                                                  • 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
                                                                  • 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

                                                                • Two thirds would only pay for face-to-face advice…
                                                                  • Figure 31: Attitudes towards mortgage advice, December 2016
                                                                • …but nearly half are interested in digital advice
                                                                  • Figure 32: Interest in receiving mortgage advice via digital channels, by age, December 2016
                                                              • Attitudes towards Mortgage Advice

                                                                • Aggregators are a threat to mortgage advice
                                                                  • Figure 33: Attitudes towards mortgage advice, December 2016
                                                                • Independent advisers carry a greater sense of authority
                                                                  • 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
                                                                  • 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
                                                                  • Figure 36: Attitudes towards mortgage advice – CHAID – Tree output, December 2016
                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                  • Abbreviations
                                                                    • Consumer research methodology
                                                                      • CHAID Methodology
                                                                        • Figure 37: Attitudes towards mortgage advice – CHAID – Table output, December 2016

                                                                    Companies Covered

                                                                    To learn more about the companies covered in this report please contact us.

                                                                    Mortgage Advice - UK - April 2017

                                                                    US $2,672.70 (Excl.Tax)