Sorry for interrupting, this website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Learn more
Accept & Close

Mortgages - UK - March 2014

“Current market conditions present an opportunity for lenders to start promoting long-term fixed rate mortgages among UK consumers. As interest rates will only increase in the future, there has never been a better time to get people thinking about the advantages of longer-term mortgage products.”

– Stevan Obradovic, Financial Services Analyst

Some questions answered in this report include:

  • Capitalising on low interest rates to promote long-term fixed products
  • Customer confusion and dealing with interest-only mortgage clients
  • The MMR and consumer preferences will drive a change in distribution strategies

What you get

What's included

Why buy from us?

Succeed

Our reports will provide you with market data, consumer research and competitive intelligence to succeed in your market.

Instant Access

Buy now and you'll have instant access to the information you need to make the right decisions.

Opportunities

Find out what's next in the markets that matter to you: where opportunities lie and what challenges you will face.

Trusted

A business Superbrand, Mintel is a source you can trust. We have been defining and refining the Market Intelligence mix since 1972.

Table of contents

  1. Introduction

      • Market definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Gross mortgage advances increased in 2013 and will continue to grow
                • Figure 1: Forecast of gross mortgage lending, 2008-18
              • First-time buyers driving growth of house purchase loans
                • 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
                                • Figure 3: Top six mortgage lenders, by gross advances, 2013
                              • Nationwide leads the way on trust
                                • Figure 4: Attitudes towards and usage of brands operating in the mortgages sector, December 2013
                              • The consumer
                                • Mortgage ownership
                                  • Figure 5: Mortgage ownership, December 2013
                                • Type of mortgage held
                                  • Figure 6: Type of mortgage held, December 2013
                                • Consumer mortgaging and re-mortgaging intentions
                                  • Figure 7: Mortgaging and re-mortgaging intentions over the next 12 months, December 2013
                                • Consumer preferences for arranging mortgages
                                  • Figure 8: Preferred methods of mortgage arrangement, December 2013
                                • Attitudes towards Help to Buy
                                  • Figure 9: Attitudes towards the Help to Buy scheme, December 2013
                                • Consumer attitudes towards house prices
                                  • Figure 10: Consumer attitudes towards house prices, December 2013
                                • Consumer attitudes towards fixed-rate mortgages
                                  • Figure 11: Consumer attitudes towards fixed-rate mortgages, December 2013
                                • Consumer attitudes towards mortgage repayments
                                  • Figure 12: Consumer attitudes towards mortgage repayments, December 2013
                                • What we think
                                • Issues and Insights

                                    • 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

                                                      • Taking a smaller hit today
                                                        • Skype with your mortgage lender
                                                          • Mintel futures: Generation Next
                                                          • Market Drivers

                                                            • 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
                                                                        • 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
                                                                        • 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
                                                                            • 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
                                                                              • Figure 16: Annual change in average UK house price – comparison of four sources, Q1 2007-Q4 2013
                                                                          • SWOT Analysis

                                                                              • Figure 17: UK mortgage market, SWOT analysis, 2014
                                                                          • Who’s Innovating?

                                                                            • 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

                                                                                      • Key points
                                                                                        • Gross mortgage lending up by 21% in 2013
                                                                                          • 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
                                                                                            • 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

                                                                                              • Key points
                                                                                                • Banks account for the lion’s share of mortgage lending
                                                                                                  • Figure 21: Gross mortgage lending, by type of lender (not seasonally adjusted), 2007-13
                                                                                                • All types of mortgage advances increased in 2013
                                                                                                  • Figure 22: Gross mortgage lending, by type of loan, 2006-13
                                                                                                • First-time buyers driving growth of house purchase loans
                                                                                                  • Figure 23: Loans advanced for house purchase, by type of borrower, 2006-13
                                                                                              • Market Share

                                                                                                • Key points
                                                                                                  • Lloyds Banking Group leads the way in gross mortgage lending
                                                                                                    • Figure 24: Top six mortgage lenders, by gross advances, 2011-13
                                                                                                • Companies and Products

                                                                                                  • Barclays
                                                                                                      • Figure 25: Key annual financial data for Barclays PLC, 2012 and 2013
                                                                                                    • HSBC
                                                                                                        • Figure 26: Key annual financial data for HSBC Bank PLC, 2012 and 2013
                                                                                                      • Lloyds Banking Group
                                                                                                          • Figure 27: Key annual financial data for Lloyds Banking Group, 2012 and 2013
                                                                                                        • Nationwide
                                                                                                            • Figure 28: Key annual financial data for Nationwide Building Society, 2011/12 and 2012/2013
                                                                                                          • RBS/NatWest
                                                                                                              • Figure 29: Key annual financial data for RBS Group, 2012 and 2013
                                                                                                            • Santander
                                                                                                                • Figure 30: Key annual financial data for Santander UK, 2012 and 2013
                                                                                                            • Brand Communication and Promotion

                                                                                                              • Key points
                                                                                                                • Mortgage advertising almost doubled in 2012/13
                                                                                                                  • Figure 31: Total advertising expenditure on mortgage products and services, 2008/09-2012/13
                                                                                                                • Two thirds of advertising expenditure are focused on brand building
                                                                                                                  • 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
                                                                                                                  • 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
                                                                                                                  • Figure 34: Proportional distribution or mortgage adspend (excluding equity release), by media type, 2010/11-2012/13
                                                                                                                • A note about adspend
                                                                                                                • Brand Research

                                                                                                                  • Brand map
                                                                                                                      • Figure 35: Attitudes towards and usage of brands operating in the mortgages sector, December 2013
                                                                                                                    • Correspondence analysis
                                                                                                                      • Brand attitudes
                                                                                                                        • Figure 36: Attitudes, by brands operating in the mortgages sector, December 2013
                                                                                                                      • Brand personality
                                                                                                                        • Figure 37: Personality of brands operating in the mortgages sector – macro image, December 2013
                                                                                                                        • Figure 38: Personality of brands operating in the mortgages sector – micro image, December 2013
                                                                                                                      • Brand experience
                                                                                                                        • Figure 39: Usage of brands operating in the mortgages sector, December 2013
                                                                                                                        • Figure 40: Satisfaction with various brands operating in the mortgages sector, December 2013
                                                                                                                        • Figure 41: Consideration of brands operating in the mortgages sector, December 2013
                                                                                                                        • Figure 42: Consumer perceptions of current performance of brands operating in the mortgages sector, December 2013
                                                                                                                      • Brand recommendation
                                                                                                                        • Figure 43: Recommendation of brands operating in the mortgages sector, December 2013
                                                                                                                      • Target group analysis
                                                                                                                        • Figure 44: Target groups, December 2013
                                                                                                                        • 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

                                                                                                                                • Key points
                                                                                                                                  • Sales split evenly between intermediated and direct channels
                                                                                                                                    • 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
                                                                                                                                    • Figure 47: Distribution of regulated mortgage sales, advised versus non-advised, 2008/09-2012/13
                                                                                                                                • Mortgage Ownership

                                                                                                                                  • Key points
                                                                                                                                    • Some 35% of UK adults have a mortgage on their home
                                                                                                                                      • Figure 48: Mortgage ownership, December 2013
                                                                                                                                    • Bell-shaped distribution of mortgage ownership when it comes to age
                                                                                                                                      • Figure 49: Mortgage ownership, by age, December 2013
                                                                                                                                    • Household income is influential in mortgage ownership
                                                                                                                                      • Figure 50: Mortgage ownership, by gross annual household income, December 2013
                                                                                                                                    • Married couples and those with children more likely to have a mortgage
                                                                                                                                      • Figure 51: Mortgage ownership, by gross annual household income, December 2013
                                                                                                                                  • Type of Mortgage Held

                                                                                                                                    • Key points
                                                                                                                                      • Around two fifths have a variable rate or tracker mortgage
                                                                                                                                        • Figure 52: Type of mortgage held, December 2013
                                                                                                                                      • Consumer confusion about interest-only mortgages
                                                                                                                                        • Confusion is more pronounced among younger adults
                                                                                                                                          • Figure 53: Ownership of interest-only and variable/tracker mortgages, by age, December 2013
                                                                                                                                      • Developments in the Interest-Only Mortgage Market

                                                                                                                                        • Key points
                                                                                                                                          • One in two adults saving to repay the capital on their interest-only mortgage
                                                                                                                                            • 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
                                                                                                                                              • 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

                                                                                                                                            • Key points
                                                                                                                                              • Around a fifth of adults are considering a mortgage/re-mortgage
                                                                                                                                                • Figure 56: Mortgaging and re-mortgaging intentions over the next 12 months, December 2013
                                                                                                                                              • Mortgaging intentions are highest among 25-34-year-olds
                                                                                                                                                • 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
                                                                                                                                                • Figure 58: Mortgaging and re-mortgaging intentions over the next 12 months, by region, December 2013
                                                                                                                                              • Household financial situation drives mortgaging intentions
                                                                                                                                                • 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

                                                                                                                                              • Key points
                                                                                                                                                • Consumers still show preference towards face-to-face sales
                                                                                                                                                  • 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
                                                                                                                                                    • 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
                                                                                                                                                    • Figure 62: Preferred methods of mortgage arrangement, by type of mortgage held, December 2013
                                                                                                                                                • Attitudes Towards Help to Buy

                                                                                                                                                  • Key points
                                                                                                                                                    • A fifth of adults would be interested in using the Help to Buy scheme
                                                                                                                                                      • Figure 63: Attitudes towards the Help to Buy scheme, December 2013
                                                                                                                                                    • Younger adults are more interested in the Help to Buy scheme
                                                                                                                                                      • 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
                                                                                                                                                        • 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

                                                                                                                                                      • Key points
                                                                                                                                                        • The majority of home owners feel that property is a good investment
                                                                                                                                                          • Figure 66: Consumer attitudes towards house prices, December 2013
                                                                                                                                                        • Interest-only mortgage holders more dependent on rising house prices
                                                                                                                                                          • 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
                                                                                                                                                          • Figure 68: Consumer attitudes towards house prices, by first-time buyer mortgaging intentions, December 2013
                                                                                                                                                      • Consumer Attitudes Towards Fixed-Rate Mortgages

                                                                                                                                                        • Key points
                                                                                                                                                          • Strong interest for long term fixed rate products
                                                                                                                                                            • Figure 69: Consumer attitudes towards fixed-rate mortgages, December 2013
                                                                                                                                                          • Lenders need to convince variable/tracker product holders to switch
                                                                                                                                                            • 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
                                                                                                                                                            • 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

                                                                                                                                                          • Key points
                                                                                                                                                            • Over two fifths do not think they would be able to get a new mortgage or re-mortgage
                                                                                                                                                              • Figure 72: Consumer attitudes towards mortgage repayments, December 2013
                                                                                                                                                            • Improvements in household finances drives overpayment intentions
                                                                                                                                                              • 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
                                                                                                                                                              • 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

                                                                                                                                                              • Figure 75: GFK NOP Consumer Confidence Barometer January 1989-February 2014
                                                                                                                                                              • Figure 76: UK households, by size, 2008-18
                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                              • Figure 77: Best and worst case forecast of gross mortgage lending, 2013-18
                                                                                                                                                          • Appendix – Brand Research

                                                                                                                                                              • Figure 78: Brand usage, December 2013
                                                                                                                                                              • Figure 79: Brand commitment, December 2013
                                                                                                                                                              • Figure 80: Brand momentum, December 2013
                                                                                                                                                              • Figure 81: Brand diversity, December 2013
                                                                                                                                                              • Figure 82: Brand satisfaction, December 2013
                                                                                                                                                              • Figure 83: Brand recommendation, December 2013
                                                                                                                                                              • Figure 84: Brand attitude, December 2013
                                                                                                                                                              • Figure 85: Brand image – macro image, December 2013
                                                                                                                                                              • 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
                                                                                                                                                              • Figure 89: Brand usage, by target groups, December 2013
                                                                                                                                                          • Appendix – Mortgage Ownership

                                                                                                                                                              • Figure 90: Mortgage ownership, by demographics, December 2013
                                                                                                                                                          • Appendix – Type of Mortgage Held

                                                                                                                                                              • Figure 91: Nets of type of mortgage held, by demographics, December 2013
                                                                                                                                                              • Figure 92: Type of mortgage held, by demographics, December 2013
                                                                                                                                                          • Appendix – Developments in the Interest-Only Mortgage Market

                                                                                                                                                              • 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
                                                                                                                                                              • 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
                                                                                                                                                              • 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
                                                                                                                                                          • Appendix – Consumer Mortgaging and Re-Mortgaging Intentions

                                                                                                                                                              • Figure 99: Mortgaging and re-mortgaging intentions, by demographics, December 2013
                                                                                                                                                          • Appendix – Consumer Preferences for Arranging Mortgages

                                                                                                                                                              • Figure 100: Preferred methods of mortgage arrangement, by demographics, December 2013
                                                                                                                                                          • Appendix – Attitudes Towards Help to Buy

                                                                                                                                                              • Figure 101: Attitudes towards the help-to-buy scheme, by demographics, December 2013
                                                                                                                                                          • Appendix – Consumer Attitudes Towards House Prices

                                                                                                                                                              • Figure 102: Agreement with the statement ‘Buying property is a good long-term investment’, by demographics, December 2013
                                                                                                                                                              • Figure 103: Agreement with the statement ‘An increase in house prices increases my confidence in the economy’, by demographics, December 2013
                                                                                                                                                              • Figure 104: Agreement with the statement ‘An increase in house prices makes me feel more financially secure’, by demographics, December 2013
                                                                                                                                                          • Appendix – Consumer Attitudes Towards Fixed-Rate Mortgages

                                                                                                                                                              • 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
                                                                                                                                                              • 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
                                                                                                                                                          • Appendix – Consumer Attitudes Towards Mortgage Repayments

                                                                                                                                                              • 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
                                                                                                                                                              • Figure 108: Agreement with the statement ‘I would struggle to meet my mortgage repayments if interest rates increased^’, by demographics, December 2013
                                                                                                                                                              • Figure 109: Agreement with the statement ‘I am planning to make overpayments on my mortgage during the next 12 months^’, by demographics, December 2013

                                                                                                                                                          Companies Covered

                                                                                                                                                          • Abbey
                                                                                                                                                          • Alliance & Leicester
                                                                                                                                                          • Asda Group Ltd
                                                                                                                                                          • Barclaycard
                                                                                                                                                          • Barclays Bank plc
                                                                                                                                                          • Birmingham Midshires
                                                                                                                                                          • Cheltenham & Gloucester plc
                                                                                                                                                          • First Direct
                                                                                                                                                          • Grupo Santander UK
                                                                                                                                                          • HBOS plc (Halifax Bank of Scotland)
                                                                                                                                                          • HSBC Private Bank (UK) Limited
                                                                                                                                                          • ING Direct
                                                                                                                                                          • Lloyds Banking Group
                                                                                                                                                          • Nationwide Building Society
                                                                                                                                                          • NatWest
                                                                                                                                                          • Royal Bank of Scotland Group plc
                                                                                                                                                          • Woolwich plc

                                                                                                                                                          Mortgages - UK - March 2014

                                                                                                                                                          £1,995.00 (Excl.Tax)