2022
9
UK Mortgage Advice Market Report 2022
2022-05-25T04:13:23+01:00
OX1104583
2195
151566
[{"name":"Mortgages","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services\/mortgages"}]
Report
en_GB
“After benefiting from a surge in mortgage lending activity in 2021, operating conditions have become more challenging for mortgage advisers in 2022. High inflation is squeezing household incomes and causing…

UK Mortgage Advice Market Report 2022

£ 2,195 (Excl.Tax)

Report Summary

“After benefiting from a surge in mortgage lending activity in 2021, operating conditions have become more challenging for mortgage advisers in 2022. High inflation is squeezing household incomes and causing lenders to be more cautious about lending. While housing market activity will not be as robust in the near term, increased uncertainty is likely to motivate more prospective homebuyers to seek out expert advice about how to successfully secure mortgage financing in a more restrictive environment.”

– George Zaborowski, Senior Analyst – Financial Services, May 2022

This report covers the following issues:

  • The impact of the rising cost of living on the mortgage advice market.
  • How demand for mortgage advice is likely to evolve after the pandemic.
  • Performance and activity of the market’s key players.
  • Product launches and how digital innovation is transforming mortgages.
  • Factors driving consumer demand for mortgage advice.
  • Attitudes and behaviour towards mortgage advice and advisers.

Table of Contents

  1. Overview

      • Key issues covered in this Report
        • Market context
          • Products covered in this Report
          • Executive Summary

              • The five-year outlook for mortgage advice
                • Figure 1: Category outlook, 2022-27
              • The market
                • Intermediaries accounted for close to 80% of mortgage sales in 2021
                  • Figure 2: Proportion of mortgage sales volumes, by direct and intermediary channels, 2021 (est)
                  • Figure 3: Proportion of mortgage sales volumes, by direct and intermediary, 2014-21
                • Nearly all new mortgage business is advised
                  • Mortgage lending activity will slow amid challenging economic conditions
                    • Potential removal of mortgage affordability stress test would boost demand for advice
                      • Companies and brands
                        • Overall number of firms advising on mortgages remained steady in 2020
                          • Figure 4: Proportion of different types of mortgage advice firms, by number of staff advising, 2020
                        • Mortgage advice firms produce strong results in 2021
                          • 2021 an active year for company acquisitions
                            • Innovation focuses on digitising the mortgage lending process
                              • The consumer
                                • Bank-based advisers and mortgage brokers the two most preferred sources of advice
                                  • Figure 5: Main source of mortgage advice when arranging next mortgage, by existing mortgage owners and prospective first-time buyers, 2022
                                • Prospective borrowers most comfortable handling general tasks independently
                                  • Figure 6: Mortgage-related tasks prospective borrowers would be happy to complete independently, 2022
                                • In-person mortgage advice remains highly relevant…
                                  • …but most are comfortable handling each mortgage-related task remotely
                                    • Figure 7: Channel preference for completing mortgage-related tasks, 2022
                                  • Access to best deals, expertise and time saving the top benefits of using an adviser
                                    • Figure 8: Perceived main benefits of using a mortgage adviser, by existing mortgage owners and prospective first-time buyers, 2022
                                  • Online reviews are highly important for customers when looking for an adviser
                                    • FTBs most prepared to pay upfront fees and expect in-person advice to cost more
                                      • Figure 9: Level of agreement with statements about attitudes towards mortgage advice and advisers, 2022
                                  • Issues and Insights

                                    • The effects of rising inflation will underline the importance of advice
                                      • Digitisation of mortgage advice is inevitable, but a lingering attachment to in-person advice remains
                                      • Market Size and Performance

                                        • Demand for mortgage advice reverting to pre-COVID levels after strong 2021
                                          • Figure 10: Category outlook, 2022-27
                                        • Intermediaries account for nearly 80% of mortgage sales in 2021
                                          • Figure 11: Proportion of mortgage sales volumes, by direct and intermediary channels, 2021 (est)
                                          • Figure 12: Proportion of mortgage sales volumes, by direct and intermediary, 2014-21
                                        • Nearly all new mortgage business is advised
                                          • Figure 13: Proportion of advised and non-advised mortgage sales, by volume, 2021 (est)
                                          • Figure 14: Proportion of advised and non-advised mortgage sales, 2014-21
                                      • Market Drivers

                                        • The surge in mortgage lending in 2021 unlikely to continue into 2022
                                          • Figure 15: Annual gross secured lending to individuals, by purpose, 2017-21
                                        • Strong rise in house prices and transactions from mid-2020
                                          • Figure 16: Annual house price index, January 2017-February 2022
                                        • Unemployment back to pre-COVID levels but workforce has shrunk
                                          • Figure 17: Quarterly unemployment rate, 2017-21
                                        • High inflation is putting a major squeeze on household incomes
                                          • Figure 18: Consumer concerns about household finances, 2021-22
                                        • Mortgage interest rates on the rise
                                          • Figure 19: Interest rates for selected types of mortgages, 2016-22
                                        • Lenders tightening lending standards amid uncertainty
                                          • Figure 20: Gross advances, by LTV, 2019-21
                                      • Regulatory and Legislative Environment

                                        • BoE contemplating removal of mortgage affordability stress test
                                          • FCA unveils three-year plan to improve outcomes in financial services
                                            • Challenger banks warned about weak financial crime policies
                                              • FCA continues to urge greater support for ‘mortgage prisoners’
                                              • Market Composition

                                                • Overall number of firms advising on mortgages remained steady in 2020
                                                  • Impact of pandemic proves milder than may have been expected
                                                    • Figure 21: Number of firms and staff advising on mortgages, by type of firm, 2019 and 2020
                                                  • Number of smaller advisory firms rose strongly in 2020
                                                    • Figure 22: Number of mortgage broker firms and staff, by adviser band, 2019 and 2020
                                                • Key Players

                                                  • Largest national brokers
                                                    • Countrywide/Connells Group
                                                      • Mortgage Advice Bureau
                                                        • London & Country
                                                          • John Charcol
                                                            • Mortgage networks
                                                              • Mortgage clubs
                                                                • Lenders
                                                                  • Figure 23: UK mortgage providers, by total outstanding mortgage balances, 2020 and 2021
                                                              • Competitive Strategies

                                                                • Industry consolidation activity gathers pace
                                                                  • Connells Group buys Countrywide
                                                                    • Trussle acquired by US firm “Better”
                                                                      • Starling Bank acquires Fleet Mortgages
                                                                        • Mojo Mortgages taken over by RVU
                                                                          • Howden Broking enters mortgage advice market via takeover of SPF Private Clients
                                                                            • Mortgage Advice Bureau acquires Fluent Money Group
                                                                              • London & Country and Habito considering mortgage broker merger
                                                                                • L&G, Sesame Bankhall and SimplyBiz form Mortgage Climate Action Group
                                                                                • Launch Activity and Innovation

                                                                                  • New innovations focus on simplifying mortgage lending via digitisation
                                                                                    • L&G mortgage club introduces automated affordability calculator for advisers
                                                                                      • Multiply AI and Mojo launch digital advice and mortgage broker app
                                                                                        • Stipendium launches all-in-on home-buying product – ‘Merge’
                                                                                          • Digital estate agent and mortgage broker “Strike” expands operations
                                                                                            • Broker ID platform now available to mortgage advisers
                                                                                              • PRIMIS implements Twenty7Tec’s APPLY module
                                                                                              • Mortgage Ownership

                                                                                                • 25% of adults own a home with a mortgage
                                                                                                  • Figure 24: Current housing situation, 2022
                                                                                                • Generation X and Millennials the key target markets for mortgage advice
                                                                                                  • FTBs are Younger Millennials and Generation Z
                                                                                                    • Figure 25: Current housing situation, by generation, 2022
                                                                                                • Main Source of Past and Future Mortgage Advice

                                                                                                  • 79% used an adviser for last mortgage arrangement
                                                                                                    • Figure 26: Main source of mortgage advice when arranging last mortgage, 2022
                                                                                                  • An intermediary most likely to be main source of advice in future
                                                                                                    • Figure 27: Main source of mortgage advice when arranging next mortgage, 2022
                                                                                                  • Bank-based advisers the go-to source for many first-time buyers…
                                                                                                    • …but many may be better off consulting with a mortgage broker
                                                                                                      • Over a fifth of existing mortgage owners don’t expect to use an adviser
                                                                                                        • Figure 28: Main source of mortgage advice when arranging next mortgage, by existing mortgage owners and prospective first-time buyers, 2022
                                                                                                    • Mortgage-related Tasks Borrowers Would Complete Independently

                                                                                                      • Prospective borrowers are most comfortable handling general tasks independently
                                                                                                        • Figure 29: Mortgage-related tasks prospective borrowers would be happy to complete independently, 2022
                                                                                                      • Existing mortgage owners able to carry out more tasks on their own
                                                                                                        • Advisers prove their worth in the details
                                                                                                        • Channel Preference for Completing Mortgage-related Tasks

                                                                                                          • Initial mortgage information gathering typically takes place online
                                                                                                            • The more involved the task is, the more human interaction is likely to be preferred
                                                                                                              • The inexperienced place a higher value on in-person guidance
                                                                                                                • Figure 30: Channel preference for completing mortgage-related tasks, 2022
                                                                                                              • Investing in a multichannel approach can attract more business…
                                                                                                                • …but most are already comfortable doing everything remotely
                                                                                                                • Perceived Main Benefits of Using a Mortgage Adviser

                                                                                                                  • Gaining access to the best deals the top reason for using an adviser
                                                                                                                    • Expertise and time saving are also key
                                                                                                                      • Figure 31: Perceived main benefits of using a mortgage adviser, 2022
                                                                                                                    • FTBs value general advice about home buying
                                                                                                                      • Figure 32: Perceived main benefits of using a mortgage adviser, by existing mortgage owners and prospective first-time buyers, 2022
                                                                                                                  • Attitudes towards Mortgage Advice and Advisers

                                                                                                                    • Most prospective customers would use online reviews to find an adviser
                                                                                                                      • Figure 33: Level of agreement with statements about attitudes towards mortgage advice and advisers, 2022
                                                                                                                    • Over two thirds are confident about making mortgage-related decisions
                                                                                                                      • FTBs are prepared to pay upfront fees and expect in-person advice to cost more…
                                                                                                                        • …but could be hesitant about paying high fees for online-based advice
                                                                                                                          • Figure 34: Agreement with selected statements about attitudes towards mortgage advice and advisers, by existing mortgage owners and prospective first-time buyers, 2022
                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                          • Abbreviations
                                                                                                                            • Consumer research methodology

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