Mortgage intermediaries continue to grow their share of new lending. However, this is in the context of a shrinking UK mortgage advice market. The decline in secured lending began in 2022, gaining momentum in 2023 as higher interest rates reduced affordability. The mortgage market will remain subdued in 2024, with a steady recovery forecast in 2025. Competition between advisers will therefore intensify, raising the need for efficiencies and diversification of services.
The high cost of borrowing remains the number one threat to the mortgage advice industry. The Bank of England is widely expected to cut the official base rate this year, as inflation continues to fall. However, there is some uncertainty over the timing and extent of any cuts. Reductions in interest rates are needed to ease the pressure on borrowers refinancing their loans, and boost remortgage activity. They are also needed to improve affordability, which will help home-movers and those looking to take their first step onto the housing ladder.
Emerging mortgage advice market trends suggest that the medium-to-long term prospects are more positive, with millions aspiring to become homeowners or looking to refinance. Product development and rising consumer interest in new specialist areas, such as intergenerational, later-life and green mortgages, are also expanding opportunities for mortgage advice.
Key Issues Covered in this Report
- The size of the intermediary mortgage market, by number of firms and advisers, and by share of sales
- Innovation and product development within the scope of mortgage advice
- The impact of inflation and higher interest rates on the mortgage market, as well as the advice needs of borrowers
- Consumer experiences of mortgage advice and the client-adviser relationship
- Awareness and usage of digital brokers among existing and prospective borrowers
- Willingness to use digital-only channels during the mortgage journey, as well as interest in mortgage monitoring apps and advice on green mortgages and home energy efficiency
Purchase the full report for a complete overview of the UK mortgage advice market, including in-depth market dynamics, consumer insights and innovation opportunities. Readers of this report may also be interested in Mintel’s UK Mortgages Market Report.
Meet The Expert
This report is written by Sarah Hitchcock, Associate Consultant – Financial Services at Mintel. Sarah has worked for Mintel since 2001, initially as a member of the UK Financial Services team before turning freelance and taking up the role of an associate consultant. As a finance specialist, she works across the full range of UK banking, insurance, investment and pension report titles.
The downturn in mortgage lending presents an opportunity for advisers to extend the mortgage advice proposition and diversify into new areas.
Sarah Hitchcock
Associate Consultant – Financial Services
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Executive Summary
- Opportunities for the mortgage advice market
- Diversifying into new areas can help offset the drop in mortgage income
- Maximise opportunities from returning customers
- Target would-be FTBs with free consultations and digital tools
- Market dynamics and outlook
- Market size and forecast
- Market predictions
- Intermediaries continue to grow their share of mortgage sales…
- Graph 1: number of regulated mortgage sales, by channel, 2018-23
- …in a declining market
- Graph 2: total gross secured lending, 2019-23
- Key players and market developments
- A heavily fragmented market
- Competitive context
- FinTechs drive recent innovations
- What consumers want and why
- Uncovering the size of the target market and potential business leads
- Despite the downturn, many have house-purchase or refinancing intentions
- Three key opportunities
- Advisers have a major opportunity to win repeat business and cross-sell other products
- Digital brokers still have work to do to improve brand awareness
- Almost two thirds are willing to undertake the entire mortgage journey online
- Graph 3: agreement statement “I’m happy to undertake the whole mortgage/remortgage application process digitally/online*”, % of respondents, 2024
- Strong interest in green solutions and mortgage monitoring services
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Market Dynamics
- Market size
- Intermediary mortgage sales fell by a quarter in 2023
- Graph 4: number of regulated mortgage sales, by channel, 2018-23
- Historic context: the rise of the mortgage intermediary
- Graph 5: advised and intermediary share of total regulated mortgage sales, 2013-23
- Both lenders and borrowers have made greater use of intermediaries over the past decade
- Changing tenure patterns create new opportunities for mortgage advisers
- Market segmentation
- Customer mix is dependent on wider market factors
- Graph 6: number of regulated mortgage sales, by type of borrower, 2018-22
- Home-mover and FTB sales declined as rate rises started to bite
- Market composition and key players
- Sharp drop in bank and building society based advice
- Graph 7: number of staff advising on mortgages*, by type of firm, 2020 and 2022
- Mortgage brokers: industry snapshot
- Mortgage brokers record growth in firm and adviser numbers
- Graph 8: number of mortgage brokers and staff advising on mortgage products, by size of firm, 2022
- Connells, LSL and Mortgage Advice Bureau are among the largest brokers
- Digital brands can be vulnerable in a downturn…
- …making them ripe for acquisition
- Market drivers
- Mortgage lending fell sharply in 2023…
- Graph 9: gross secured lending to individuals, 2018-23
- …driven by a fall in mortgage transactions
- Graph 10: number of transactions secured on residential property, 2018-23
- Higher borrowing costs prompts more people to seek expert help
- Graph 11: average quoted household interest rates for selected mortgage products, 2021-24
- Inflation eases, raising expectations of an interest rate cut
- Graph 12: CPI inflation rate, 2021-24
- 1.6 million customers due to see their fixed-rate deal expire this year
- Mortgage arrears and credit defaults rise, boosting demand for specialist advice
- Mortgage holders and renters are less confident about their financial prospects
- Graph 13: the financial confidence index, 2016-23
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What Consumers Want and Why
- Mortgage ownership and expectations
- Roughly one in four UK adults have a mortgage
- Graph 14: proportion of mortgage holders and private renters, by age, 2024
- Would-be borrowers are looking for help to get onto the property ladder
- Millions expect to need specialist mortgage or protection advice
- Graph 15: proportion of adults who are likely to seek advice on the following areas within the next two years, by homeowners and non-homeowners, 2024
- Key opportunities for mortgage advisers for 2024-25
- Recent experience of mortgage advice
- Most turn to advisers when arranging a new loan
- Graph 16: type of mortgage adviser used to arrange last mortgage/remortgage, 2024
- Brokers benefit as lenders shift business focus online
- Considerable scope for growth for online mortgage brokers
- Graph 17: channels used to communicate with adviser during the application process, 2024
- Multi-channel communication remains prevalent
- Two thirds paid a fee for mortgage advice
- Graph 18: segmentation of advised mortgage customers by whether or not they paid a fee for the advice, % of respondents, 2024
- Scope to increase protection cross-sales further
- Graph 19: proportion of advised mortgage customers who arranged protection insurance at the time, 2024
- Ongoing communication with mortgage adviser
- Follow-up communications vary in type and consistency
- Keeping in touch with clients offers key benefits
- Huge potential for repeat business
- Graph 20: proportion of advised customers who would use their adviser again for mortgage/other advice, % of respondents, 2024
- Usage and awareness of digital advisers
- Little variation in usage among digital broker brands
- Graph 21: usage and awareness of selected digital mortgage brokers, 2024
- Scope to improve brand awareness…
- …and differentiation
- Awareness is particularly strong among prospective FTBs
- Graph 22: proportion of respondents who have used or heard of selected digital brokers, by type of customer, 2024
- Consumer attitudes and interest
- Significant interest in advice on green mortgages and environmentally friendly solutions
- Graph 23: agreement with statements about mortgage advice and product deal trackers, 2024
- Mortgage customers are becoming more eco-conscious
- A mix of digital and ‘human’ interfaces are the key to success
- Around two thirds of mortgage customers are worried about their payments rising
- Graph 24: agreement with statement “I am worried about my mortgage payments rising in the future”, 2024
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Innovation And Marketing Trends
- Competitive strategies and recent launch activity
- Rightmove launches a mortgage advice service
- Habito launches GreenVal, a retrofit tool for homeowners
- Saga launches mortgage advice service in partnership with Tembo
- More brokers sign up to Dashly’s mortgage monitoring platform
- L&C establishes a new specialist finance partnership
- Acquisition of Fluent bolsters MAB’s revenue mix
- Gen H adopts an intermediary-only approach
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Appendix
- Supplementary data
- 2014 regulatory changes linked to the Mortgage Market Review
- Market size: intermediary versus direct mortgage sales
- Market size: advised versus non-advised mortgage sales
- Market drivers: gross mortgage lending
- Market drivers: type of advance
- Market composition: number of firms and advisers
- Report scope and definitions
- Market definitions
- Abbreviations and terms
- Methodology
- Consumer research methodology
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