Mortgages - UK - April 2019
Covered in this report
This report includes discussion of residential mortgages used for the following reasons:
- House purchase: the loan is used to purchase a property.
- Remortgage: where a mortgage borrower redeems his/her existing mortgage with their current lender and takes out a new mortgage on the same property.
- Further advance: a form of additional borrowing offered by lenders to their existing mortgage customers for the purposes of home improvements or to buy a car etc. By taking out a further advance, a borrower is increasing their overall mortgage debt with the lender.
For the purposes of this report, Mintel has used the following definitions of mortgage interest rates:
- Fixed rate: the interest payments are fixed for a set period of time, after which the borrower will be moved on to another rate, such as the lender’s standard variable rate.
- Standard variable rate (SVR): the interest varies with the lender’s mortgage rate.
- Tracker rate: the interest rate moves up or down by tracking an external rate, such as the Bank of England base rate or LIBOR (London Interbank Offered Rate).
- Discounted rate: the interest rate varies with the lender’s SVR, but the rate is also discounted for a set period of time.
“Due to the economic uncertainty of Brexit, the mortgage market is going through a difficult period. Total gross mortgage lending has slowed in the past two years and will likely stagnate in 2019. However, with mortgage rates still near all-time lows, remortgage activity should remain a bright spot. The weaker housing market should also motivate first-time buyers to actively pursue opportunities to get onto the housing ladder.”
– George Zaborowski, Senior Analyst Financial Services Research
This report examines the following issues:
- Fear of rejection may be hurting demand for mortgages
- Automation is the key to creating a more competitive market
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