2021
9
UK Mortgages Market Report 2021
2021-05-01T04:15:11+01:00
OX1044879
2195
137493
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Report
en_GB
“Mortgage lending fell in 2020 as the housing market was distorted by lockdowns and the stamp duty holiday. The market was also disrupted by lenders being forced to embrace working…

UK Mortgages Market Report 2021

£ 2,195 (Excl.Tax)

Description

The UK Mortgages market report identifies consumer attitudes towards house purchasing, mortgages, and lenders in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for Mortgages in the UK. 

Current Market Landscape 

The pandemic has shown how unpredictable life can be, driving an increased demand for security and flexibility. The pandemic saw a sharp fall in lending during 2020 as higher-risk products were withdrawn and the housing market was temporarily shut down.

  • 22% are planning to take out a mortgage to buy a property in the next two years (44% among 25-34 year olds)
  • Only 7% have actually spoken to a lender/mortgage adviser (rising to 17% of 25-34 year olds)
  • 27% consider a well-known lender an important factor in choosing a mortgage (25% would prefer to use a lender they have previously used)

The introduction and extension of the stamp duty holiday helped to buoy the housing market throughout 2020, as did a surge in housing transactions during the second half of 2020. However, it was not enough to offset the earlier decline and first-time buyers remained largely locked out of the housing market due a more cautious approach to lending.

Future Market Trends in Breakfast Cereals 

The biggest threat to the mortgage market comes from the inevitable increase in unemployment. Fears over job security will be more widespread and this will mean borrowers remain cautious about taking on debt.

Mortgage lenders have an opportunity to capitalise on consumer demand for certainty and control. Already, new products have come onto the market offering longer-term fixed rates than have previously been available on the UK market. However, these products also offer no, or time-limited, exit fees, ensuring the borrowers remain in control.

Read on to discover more details or take a look at all of our UK Finances market research.

Quickly understand

  • The short, medium and long-term impact of COVID-19 on the UK mortgage market.
  • How COVID-19 has affected consumer attitudes towards buying a house and how it has changed what people want from a home.
  • An analysis of competitive strategies and launch activity.
  • Levels of satisfaction with lenders, including a key driver analysis highlighting the key areas of focus to improve customer satisfaction.
  • An assessment of the most important regulatory and legislative changes and how this is affecting the mortgage market.

Covered in this report

Brands: Lloyds Banking Group, NatWest, Nationwide, Santander, Barclays, HSBC, Virgin, Coventry Building Society, Yorkshire Building Society, TSB, Countryside, Taylor Wimpey, First Direct, Yorkshire Bank, Royal Bank of Scotland, Clydesdale Bank, Halifax, Saffron Building Society, Metro Bank, Bluestone, Ecology Building Society, Perenna, Leeds Building Society, Habito, Age Partnership, Key Retirement Solutions, Legal & General, Aviva, SunLife.

Expert analysis from a specialist in the field

This report, written by Thomas Slide, a leading analyst in the Financial Services sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Mortgage lending fell in 2020 as the housing market was distorted by lockdowns and the stamp duty holiday. The market was also disrupted by lenders being forced to embrace working from home, and the technical and financial challenges of implementing payment holidays. Mortgage availability has been improving as vaccines have been rolled out and the government has stepped in to guarantee higher-risk loans. However, the spectre of rising unemployment and the risk of house prices falling once the stamp duty holiday ends mean a significant degree of caution remains.
Thomas Slide - Research AnalystThomas Slide
Senior Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on the mortgage market
      • Figure 1: Short, medium and long-term impact of COVID-19 on the mortgage market, March 2021
    • The market
    • COVID-19 disruption leads to a 9% drop in lending across 2020
      • Figure 2: Market size and forecast for gross mortgage lending, 2015-25 (prepared March 2021)
    • High-LTV mortgages disappear in 2020
      • Figure 3: LTV ratio for mortgage lending, Q1 2018- Q4 2020
    • Rising unemployment poses a risk to the market
      • Figure 4: Quarterly unemployment rate, Q1 2017-Q4 2025
    • Government interventions continue to shape the market
    • Companies and brands
    • Mortgage market experiences further consolidation
      • Figure 5: Market share of the leading mortgage providers, by total outstanding mortgage balances, December 2020
    • Combine flexibility with certainty to reach cautious consumers
    • Lenders versus the climate crisis
    • Advertising expenditure declines a third as lending is restricted
      • Figure 6: Total above-the-line, online display and direct mail advertising expenditure on mortgages, 2016-20
    • Mintel’s brand research confirms the strength of Nationwide’s reputation
    • The Consumer
    • Purchase activity exceeds remortgaging
      • Figure 7: Reason for taking out last mortgage, February 2021
    • Brand perception matters when taking out a mortgage
      • Figure 8: Important factors in deciding on a mortgage lender, February 2021
    • Speed of responding to borrowers should be prioritised
      • Figure 9: Key drivers of overall satisfaction with current mortgage provider, February 2021
    • COVID-19 drives consumers to demand more space
      • Figure 10: Important features of a home, February 2021
    • A fifth of people have plans to take out a mortgage
      • Figure 11: Mortgage plans, by age, February 2021
    • COVID-19 has made people less likely to move
      • Figure 12: Impact of COVID-19 on moving plans, by age, February 2021
  3. Issues and Insights

    • COVID-19 has distorted the mortgage market
    • The role of the mortgage market in achieving net-zero
    • In uncertain times consumers are demanding certainty and control
  4. The Market – Key Takeaways

    • COVID-19 has had a significant impact on the mortgage market
    • High-LTV mortgages disappear in 2020
    • Rising unemployment poses a risk to the market
    • Government interventions continue to shape the market
  5. Market Size and Forecast

    • COVID-19 has a significant impact on the mortgage market
      • Figure 13: Short, medium and long-term impact of COVID-19 on mortgage lending, March 2021
    • Mortgage lending falls 9% in 2020
    • Lending has slowed for a number of years
      • Figure 14: Annual gross Sterling secured lending to individuals, 2014-20
    • Mixed recovery expected in 2021
      • Figure 15: Market size and forecast for gross mortgage lending, 2015-25 (prepared March 2021)
      • Figure 16: Market size and forecast for gross mortgage lending, 2015-25 (prepared March 2021)
    • Outstanding secured lending grows 2.9%
      • Figure 17: Gross outstanding lending secured against residential properties, Q1 2015-Q4 2020
    • Market drivers and assumptions
    • Learnings from the last recession
      • Figure 18: Total secured lending (not seasonally adjusted), 2006-12
    • Forecast methodology
  6. Market Segmentation

    • House purchasing drove mortgage activity in 2020
      • Figure 19: Segmentation of gross mortgage lending, 2014-20
      • Figure 20: Segmentation of gross mortgage lending, 2015-20
    • High-LTV mortgages almost disappear in 2020
      • Figure 21: LTV ratio for mortgage lending, Q1 2018-Q4 2020
  7. Channels to Market

    • Three quarters take advice
    • COVID-19 will drive demand for specialist lenders and brokers
      • Figure 22: Sources of advice for mortgage/remortgage, February 2021
  8. Market Drivers

    • Consumer confidence continues to recover
      • Figure 23: Financial confidence, weighted average of responses, January 2020-March 2021
    • Rising unemployment poses a risk to the housing market
      • Figure 24: Quarterly unemployment rate, Q1 2017-Q4 2025
    • House prices increase sharply in late 2020
      • Figure 25: Year-on-year house price changes, quarterly, Q1 2015-Q4 2020
    • Housing transactions slow in 2020
      • Figure 26: UK residential property transactions over £40,000, 2007-20
    • Interest rates for different products converge
      • Figure 27: Interest rates for selected types of mortgages, January 2015-February 2021
    • Government support has protected mortgage holders
      • Figure 28: Number of residential mortgage repossessions, Q4 2017-Q4 2020
  9. Regulatory and Legislative Changes

    • Government introduces Mortgage Guarantee scheme
    • Extension of stamp duty holiday
    • Help to Buy extension granted
    • FCA extends ban on repossessions to April 2021
    • New guidance issued over cladding rules
    • The prospect of negative interest rates for the mortgage market
    • Government paper recommends lenders consider energy efficiency
    • Stepping in to protect leaseholders
  10. Companies and Brands – Key Takeaways

    • Mortgage market experiences further consolidation
    • Combine flexibility with certainty to reach cautious consumers
    • Lenders versus the climate crisis
    • Advertising expenditure declines a third as lending is restricted
    • Nationwide has a particularly highly rated brand in mortgage lending
  11. Market Share

    • Further consolidation in the mortgage market
    • NatWest Group grows its share
    • HSBC’s focus on mortgages leads to growth
      • Figure 29: UK mortgage providers, by total outstanding mortgage balances, 2019 and 2020
    • Halifax dominates Lloyds Banking Group mortgages
      • Figure 30: Lender they hold their mortgage with, February 2021
  12. Competitive Strategies

    • Supporting customers during COVID-19
      • Figure 31: Payment holidays granted, December 2020
    • Targeting first-time buyers
    • Mortgage lenders versus the climate disaster
    • Combining flexibility and certainty
    • Pulling back from an intensely competitive market
    • Adopting a cautious approach to lending
  13. Launch Activity and Innovation

    • Mortgage lenders embrace sustainability
    • NatWest launches Green Mortgages
    • Nationwide sets aside £1 billion to support energy efficiency
    • Barclays expands its range of green home mortgages
    • Ecology Building Society launches a new renovation mortgage product
    • Saffron Building Society launches green Retro Fit mortgage
    • Newbury Building Society adds GoGreen Reward for self-build mortgages
    • LBG launches the Green Living and Eco Home Hub
    • Addressing increasing financial complexity
    • Metro Bank launches ‘near-prime’ mortgage range
    • Bluestone launches ‘Age of the Unlendables’ campaign
    • Combining long-term certainty with ongoing flexibility
    • TSB launches Fix and Flex range
    • Habito introduces a 40-year fixed-rate mortgage
    • Perenna plans UK launch of 30-year fixed-rate mortgages
    • Going beyond the industry standard to protect borrowers
    • Nationwide bans repossessions for 12 months
    • Leeds Building Society suspends arrears fees
  14. Advertising and Marketing Activity

    • Advertising expenditure declines by a third in 2020
      • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on mortgages, 2016-20
    • Strong start followed by a slump in spending
      • Figure 33: Monthly above-the-line, online display and direct mail advertising expenditure for mortgages, 2020 compared to the five year average, 2016-20
    • Nationwide leads advertising expenditure
      • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on mortgages, leading advertisers, 2020
    • Brand building makes up half of spending
      • Figure 35: Total above-the-line, online display and direct mail advertising expenditure for mortgages, by category, 2016-20
    • TV spending dominates for most of the leading advertisers
      • Figure 36: Above-the-line, online display and direct mail advertising expenditure on financial services, by media type and advertiser, 2020
    • Nielsen Ad Intel coverage
  15. Brand Research

    • Brand map
      • Figure 37: Attitudes towards and usage of selected brands, March 2021
    • Key brand metrics
      • Figure 38: Key metrics for selected brands, March 2021
    • Brand attitudes: Nationwide and Halifax stand out for service
      • Figure 39: Attitudes, by brand, March 2021
    • Brand personality: Santander boasts a ‘fun’ image
      • Figure 40: Brand personality – macro image, March 2021
    • HSBC more likely to be viewed as authoritative and prestigious
      • Figure 41: Brand personality – micro image, March 2021
    • Brand analysis
    • Nationwide comes highly recommended
      • Figure 42: User profile of Nationwide, March 2021
    • Coventry Building Society is a lesser-known brand with a strong reputation
      • Figure 43: User profile of Coventry Building Society, March 2021
    • Halifax has a reputation for customer service
      • Figure 44: User profile of Halifax, March 2021
    • Yorkshire Building Society is better known but less used than other brands
      • Figure 45: User profile of Yorkshire Building Society, March 2021
    • Santander: a fun brand worth paying more for
      • Figure 46: User profile of Santander, March 2021
    • HSBC projects an authoritative and prestigious brand
      • Figure 47: User profile of HSBC Bank, March 2021
    • TSB is a brand that struggles to deliver
      • Figure 48: User profile of TSB Bank, March 2021
  16. The Consumer – Key Takeaways

    • COVID-19 will lead to more complex lending decisions
    • Speed of responding to borrowers should be prioritised
    • COVID-19 drives consumers to demand more living space
    • COVID-19 has made people less likely to move
  17. Impact of COVID-19 on the Mortgage Market

    • COVID-19 will create more complex lending decisions
      • Figure 49: Impact of COVID-19 on finances, 19 February-1 March 2021
    • Growth in forced savings could get more people onto the property ladder
      • Figure 50: Changes to savings as a result of COVID-19, 19 February-1 March 2021
    • Increased importance of open space and local amenities
    • Government support skews the market
  18. Reasons for Taking out a Mortgage

    • Remortgagers stick to what they know
      • Figure 51: Reason for taking out last mortgage, February 2021
    • Flexibility and relationships are important for remortgagers
      • Figure 52: Important factors in choosing a mortgage, by reason for taking out last mortgage (net), February 2021
  19. Important Factors in Choosing a Mortgage Lender

    • Brand perception matters when taking out a mortgage
      • Figure 53: Important factors in deciding on a mortgage lender, February 2021
    • Set-up fees are a key driver of choice
      • Figure 54: Important factors in deciding on a mortgage lender, by age, February 2021
  20. Satisfaction with Mortgage Lenders

    • High levels of satisfaction with online functionality
    • Communication and support during COVID-19 could have been better
      • Figure 55: Satisfaction with specific factors regarding mortgage lenders, February 2021
    • With age comes experience…and opinions
      • Figure 56: Overall satisfaction with mortgage lender, by age, February 2021
  21. Key Driver Analysis

    • Mortgage lenders must become more responsive
      • Figure 57: Key drivers of overall satisfaction with current mortgage provider, February 2021
      • Figure 58: Overall satisfaction with current mortgage provider – key driver output, February 2021
    • Methodology
  22. Important Features of a Home

    • COVID-19 drives demand for outside space
      • Figure 59: Important features of a home, February 2021
    • Demand for space driven by older people
      • Figure 60: Important features of a home, by age, February 2021
    • Young people are focused on affordability and work
      • Figure 61: Important features of a home, by age, February 2021
    • Families demand internal space and family ties
      • Figure 62: Important features of a home, households with children under 16 compared to the average, February 2021
    • Housing costs are a major driver of moving
      • Figure 63: Plans to move in the next two years, by important features in a home, February 2021
  23. Expected Mortgage Activity

    • Moving plans peak among 25-34 year olds
      • Figure 64: Mortgage plans, by age, February 2021
    • Flat dwellers persuaded to move by COVID
      • Figure 65: Impact of COVID-19 on moving plans, by housing type, February 2021
  24. Impact of COVID-19 on Potential Mortgage Activity

    • COVID-19 has dissuaded many people from moving
      • Figure 66: Impact of COVID-19 on moving plans, by age, February 2021
    • COVID-19 polarises parents on the topic of moving
      • Figure 67: Impact of COVID-19 on moving plans, February 2021
  25. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • Key driver analysis methodology
    • Interpretation of results
      • Figure 68: Overall satisfaction with current mortgage provider – key driver output, February 2021
      • Figure 69: Satisfaction with current mortgage provider, February 2021
  26. Appendix – Market Size and Forecast

    • Forecast methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

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Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

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*databooks not available with UK B2B Industry reports.

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