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Mortgage Advice - UK - April 2019

Covered in this report

Mortgage lenders and intermediaries have fared well over the past few years, as government interventions have drawn greater numbers of first-time buyers into the housing market, while the growing availability and popularity of short-term deals have boosted remortgaging activity. Intermediaries have additionally benefitted from the introduction of a new requirement, ensuring that the majority of regulated mortgage sales are transacted with advice. In 2018, over 70% of regulated mortgage sales were generated by an intermediary, such as a mortgage broker, compared to around 50% in 2013.

“Despite the increased risk of an economic and housing market downturn as a result of Brexit uncertainty, many UK adults have plans to arrange a mortgage, remortgage or other type of home loan in 2019. Demand for remortgaging will remain strong.”
– Sarah Hitchcock, Senior Analyst

This report looks at the following areas:

  • Mortgage advice channels viewed differently by existing mortgage holders and prospective first-time buyers
  • Online brokers can gain customers with the promise of free and fast services

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Table of contents

  1. Overview

    • What you need to know
      • Report coverage and product definitions
      • Executive Summary

          • The market
            • Intermediaries transact the lion’s share of mortgage business
              • 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
                                • 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
                                • 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
                                • Figure 4: Most preferred way of receiving mortgage advice, by key target groups, December 2018
                              • Low awareness of online broker brands among all homeowners
                                • 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
                                • Figure 6: Consideration of online brokers and familiarity with ‘robo-advice’ concept, by key target groups, December 2018
                              • What we think
                              • Issues and Insights

                                • 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

                                            • 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

                                                    • Lenders and mortgage intermediaries see strong remortgage activity
                                                      • 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
                                                        • 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

                                                        • The vast majority of mortgage sales are advised…
                                                          • Figure 9: Number of regulated residential mortgage sales, by advice given, 2013-18
                                                        • …and a large and growing proportion are intermediated
                                                          • Figure 10: Number of regulated residential mortgage sales, by sales channel, 2013-18
                                                      • Market Drivers

                                                        • 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
                                                                    • 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
                                                                    • 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

                                                                    • 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

                                                                            • 5,000 DA firms and over 14,000 ARs advise on regulated mortgage contracts
                                                                              • Largest national brokers
                                                                                • Largest networks
                                                                                  • Largest lenders
                                                                                    • Figure 13: Top 10 mortgage lenders, by gross lending, 2017
                                                                                  • Banking sector channels
                                                                                  • Digital Strategy and Innovation

                                                                                    • 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

                                                                                                      • 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

                                                                                                                • Around a quarter of UK adults have a mortgage
                                                                                                                  • 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
                                                                                                                    • 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

                                                                                                                    • More mortgage holders prefer to select a product themselves than use a broker...
                                                                                                                      • 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…
                                                                                                                              • 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
                                                                                                                              • Figure 18: Most preferred way of receiving mortgage advice (ranked in order of significance), by key target groups, December 2018
                                                                                                                          • Awareness of Online Brokers

                                                                                                                            • Awareness is limited among wider mortgage-owning population…
                                                                                                                              • 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

                                                                                                                                • Around two thirds of prospective applicants could be tempted to consider online brokers…
                                                                                                                                  • 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

                                                                                                                                    • Abbreviations
                                                                                                                                      • Consumer research methodology

                                                                                                                                      Mortgage Advice - UK - April 2019

                                                                                                                                      US $2,552.20 (Excl.Tax)