Mortgages - UK - March 2015
“The costs of renting put such a strain on people’s finances that home ownership starts to seem like an impossible dream. The negative consequences of this can be combated if more lenders work with savings providers and government initiatives to help renters take proactive steps towards saving for their first home.”
-Jessica Morley, Financial Services Analyst
This report covers the following areas:
- Regulation confusion is damaging to consumer sentiment
- Tighter restrictions disproportionately affect self-employed and single consumers
- Rent to Buy could help those struggling to afford the urban lifestyle
The mortgage market went through yet another year of upheaval in 2014. The Mortgage Market Review (MMR) represented the greatest regulatory change for more than a decade, meaning that lenders have had to devote a large share of their resources to coming to terms with the new environment. With more regulation on the way in the form of the European Mortgage Credit Directive, the FCA’s review of the MMR and a focus on interest-only mortgages, there is a growing concern that the market is becoming overly regulated and that this is having unwelcome consequences. In particular there are early indications that the pool of potential new business is becoming increasingly concentrated as specific groups, such as younger and older consumers, self-employed and single individuals and those on lower incomes, are locked out of the market due to affordability concerns.
These are all challenges that the market is more than capable of meeting head on as lenders become more confident and comfortable within their new operating environment and begin to think more innovatively about lending criteria, fees and product design. The strong growth over the past couple of years has taken gross lending over the £200 billion mark for the first time since the financial crisis, highlighting just how capable the market is of recovering from adversity.
This report examines the residential mortgage market, analysing some of the key developments in this sector, including wider economic trends and regulatory challenges. This report also provides a snapshot of mortgage lending levels, including a market forecast which shows expected growth in gross lending over the next five years. Mintel’s exclusive consumer research concludes the report, looking at product ownership, appetite for mortgages over the next 12 months, awareness of regulatory changes, attitudes towards and costs of home ownership and mortgages for both renters and mortgage owners, and general consumer attitudes towards mortgages.
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