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Description

Description

“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's included

What's included

Table of contents

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

                                                                                                                                                          About the report

                                                                                                                                                          This report will give you a complete 360-degree view of your market. Not only is it rooted in robust proprietary and high-quality third-party data, but our industry experts put that data into context and you’ll quickly understand:

                                                                                                                                                          • The Consumer

                                                                                                                                                            What They Want. Why They Want It.

                                                                                                                                                          • The Competitors

                                                                                                                                                            Who’s Winning. How To Stay Ahead.

                                                                                                                                                          • The Market

                                                                                                                                                            Size, Segments, Shares And Forecasts: How It All Adds Up.

                                                                                                                                                          • The Innovations

                                                                                                                                                            New Ideas. New Products. New Potential.

                                                                                                                                                          • The Opportunities

                                                                                                                                                            Where The White Space Is. How To Make It Yours.

                                                                                                                                                          • The Trends

                                                                                                                                                            What’s Shaping Demand – Today And Tomorrow.

                                                                                                                                                          Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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