2022
9
UK Mortgages Market Report 2022
2022-05-20T04:15:32+01:00
OX1101857
2195
151277
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Report
en_GB
“2021 was the strongest year for mortgage lending since the financial crisis, but 2022 is set to be more challenging. The rising cost of living is already feeding through into…

UK Mortgages Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Mortgages report identifies consumer attitudes towards mortgage ownership, future mortgage intentions, and homeownership in the UK. This market report covers the market trends, market statistics, market segmentation and industry trends for the Mortgages market in the UK.

Current Market Landscape

Green mortgages have increased in profile in the last two years as lenders focus on sustainability targets in the wake of the government’s ‘net zero’ strategy and growing consumer appetite for more sustainable products and services. However, despite these broader trends, Mintel’s research shows that there is some confusion and ambivalence about using green mortgage products among mortgage owners. If providers want to tap into the increased demand for energy efficiency, they will need to increase understanding and awareness of the products, and focus more on the development of products that help people to make improvements to their homes.

  • Despite 80% of mortgage owners stating that they are interested in home improvements to make their home more energy efficient, just 34% are interested in taking out a green mortgage product.
  • 69% of potential first-time buyers say they already feel it’s too difficult to save for a deposit.
  • 34% of non-homeowners say they plan to buy their first property with a mortgage in the next two years.

The rising cost of living will create a more defensive mindset among consumers, prompting some to delay major financial decisions, including buying a house. Rising prices also make it increasingly difficult for potential homebuyers to save for a deposit.

Future Market Trends in Mortgages

Inflation poses a major challenge to the mortgage market. Besides economic uncertainty, inflation and interest rates are intrinsically linked. The Bank of England’s base rate reached 1% in early May, and mortgage rates have also increased. This will further reduce demand among potential borrowers as mortgage costs increase. However, remortgage activity will pick up as mortgage owners seek to protect themselves with low interest rates while they are still available.

Despite these challenges, there remains considerable appetite for mortgage borrowing and home ownership. This will create plenty of opportunities for lenders to engage this group, with the challenging environment driving more demand for guidance and budgeting tools to help people achieve their goal.

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

Quickly understand

  • Market performance, including a five-year market forecast.
  • An analysis of competitive strategies and launch activity.
  • Mortgage ownership among consumers.
  • Behaviours of mortgage owners.
  • Future mortgage intentions.
  • Behaviours towards mortgages and homeownership.

Covered in this report

Brands: Lloyds Banking Group, Nationwide, Santander, NatWest Group, Barclays, HSBC, Virgin Money Group, Coventry Building Society, Yorkshire Building Society, TSB, Habito, Cumberland Building Society, Bank Of Scotland, First Direct, Og Enterprises.

Expert analysis from a specialist in the field

This report, written by Stefania Apostol, 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.

2021 was the strongest year for mortgage lending since the financial crisis, but 2022 is set to be more challenging. The rising cost of living is already feeding through into lower consumer confidence, which will increase reluctance to commit to major financial decisions, including buying or moving a house. Increases in the base rate will translate into higher mortgage rates, which will reduce demand as potential buyers face higher mortgage costs. However, non-homeowners continue to show a strong appetite for homeownership, suggesting demand will remain high in the coming years.

Stefania Apostol - Financial Services AnalystStefania Apostol
Financial Services Analyst

Table of Contents

  1. Overview

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

    • The five-year outlook for mortgages
      • Figure 1: Category outlook, 2022-26
    • The market
    • Gross lending grew by 26% in 2021…
      • Figure 2: Gross sterling secured lending to individuals, 2016-21
    • …but it is forecast to stabilise
      • Figure 3: Market size and forecast for gross mortgage lending, 2016-26
    • House purchasing boomed during 2021
      • Figure 4: Segmentation of gross mortgage lending, 2016-21
    • Mortgage rate rises will dampen activity in 2022
      • Figure 5: Interest rates for selected types of mortgages, 2015-22
    • Companies and brands
    • Most lenders saw outstanding mortgage balances increase in 2021
      • Figure 6: UK mortgage providers, by total outstanding mortgage balances, 2020 and 2021
    • Mortgage lenders focus on sustainability
    • Disruptor lenders target first-time buyers
    • The consumer
    • A quarter of adults have a mortgage
      • Figure 7: Housing situation, by age, 2022
    • 21% of mortgage deals were arranged in the last year
      • Figure 8: Timing of last mortgage purchase, 2022
    • Almost a quarter of mortgage holders purchased their first property
      • Figure 9: Reasons for taking out last mortgage, 2021-22
    • The vast majority found arranging their mortgage easy
      • Figure 10: Behaviours towards mortgages and homeownership, 2022
    • The appeal of green mortgages is not yet widespread…
    • …but mortgage owners would make their houses greener
      • Figure 11: Behaviours towards mortgages and homeownership, 2022
    • Over a third of aspiring homebuyers expect to use savings for their deposit
      • Figure 12: Sources of funding and sources of funding by future mortgage plans, 2022
    • The majority of non-homeowners worry about not being accepted for a mortgage
      • Figure 13: Attitudes of non-homeowners towards mortgages and homeownership, 2022
  3. Issues and Insights

    • Rising inflation will put pressure on aspirant homebuyers
    • Mortgage owners need help to engage in the green segment
  4. Market Size and Performance

    • Gross lending grew by 26% in 2021
      • Figure 14: Gross sterling secured lending to individuals, 2016-21
      • Figure 15: Gross sterling secured lending to individuals, 2016-21
  5. Market Forecast

    • The five-year outlook for mortgages
      • Figure 16: Category outlook, 2022-26
    • Gross mortgage lending is forecast to stabilise
      • Figure 17: Market size and forecast for gross mortgage lending, 2016-26
      • Figure 18: Market size and forecast for gross mortgage lending, 2016-26
    • Market drivers and assumptions
    • Forecast methodology
  6. Market Segmentation

    • House purchasing boomed during 2021…
    • …while remortgage activity remained flat
      • Figure 19: Segmentation of gross mortgage lending, 2016-21
      • Figure 20: Segmentation of gross mortgage lending, 2016-21
    • High-LTV mortgages return but face pressure as economic backdrop worsens
      • Figure 21: LTV ratio for mortgage lending, 2018-21
  7. Channels to Market

    • Intermediaries continue to dominate the distribution of mortgages
    • Most people sought advice when they took out their last mortgage
      • Figure 22: Source of advice for mortgage/remortgage, 2022
  8. Market Drivers

    • The conflict in Ukraine will hurt the UK economy
    • Rising inflation impacts household finances
      • Figure 23: Consumer concerns about household finances, 2021-22
    • Financial confidence continues to decline
      • Figure 24: Financial Confidence Index, 2019-22
    • Average UK house prices reach a record high but growth is expected to slow
      • Figure 25: Average UK house price, 2015-22
    • Housing transactions increased by 41% in 2021
      • Figure 26: UK residential property transactions over £40,000, 2015-21
    • Mortgage rate rises will dampen activity in 2022
      • Figure 27: Interest rates for selected types of mortgages, 2015-22
    • New home building activity drops
      • Figure 28: Number of permanent dwellings started and completed in the UK, 2008/09-2020/21
    • England’s housing stock is far from being energy efficient
      • Figure 29: Energy efficiency rating bands for dwellings in England, 2010-2020
    • Important features of homes
    • Outside space remains important…
    • …while proximity to the countryside becomes less important
    • The cost of housing plays on people’s minds
      • Figure 30: Important features of a home, 2021-22
  9. Regulatory and Legislative Changes

    • Bank of England plans to relax mortgage lending rules
    • The government’s Heat and Buildings Strategy will drive expansion of green finance
    • First-time buyers targeted in new Help to Buy scheme…
    • …and the First Homes scheme
    • Shared ownership threshold reduced
    • Leasehold Reform (Ground Rent) Act 2022 caps ground rents
  10. Market Share

    • Lloyds Banking Group maintains its position as the largest lender
    • Most lenders saw outstanding mortgage balances increase in 2021
      • Figure 31: UK mortgage providers, by total outstanding mortgage balances, 2020 and 2021
  11. Competitive Strategies

    • Mortgage lenders focus on sustainability
    • Virgin launches Greener Mortgages
    • Barclays and NatWest expand green mortgage offering
    • Lenders support energy efficiency improvements with preferential rates
    • Greater choice for first-time buyers
    • Newcastle Building Society and Nationwide sign up for the Deposit Unlock scheme
    • Lenders continue to invest in digital transformation
    • Starling Bank enters the mortgage market
  12. Launch Activity and Innovation

    • Disruptor lenders target first-time buyers
    • Generation Home aims to make family support easier
    • Fintechs offer equity loans to support FTBs
    • Lenders increase loan-to-income ratios
    • Nationwide launches Helping Hand
    • Income multiples increased for some HSBC and Halifax customers…
    • …while Habito One allows 7x income for borrowers from selected professions
    • Mortgage products with longer-term fixed rates on the rise
  13. Advertising and Marketing Activity

    • Adspend on mortgages continues to decline
      • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on mortgages, excluding equity release, 2017/18-2021/22
    • Santander and NatWest increase adspend
      • Figure 33: Top 10 above-the-line, online display and direct mail advertisers on mortgages, 2019/20-2021/22
    • TV dominates advertising expenditure
      • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on mortgages, by media type, 2021/22
    • Nielsen Ad Intel coverage
  14. Mortgage Ownership and Timing of Last Arrangement

    • A quarter of adults have a mortgage
      • Figure 35: Housing situation, by age, 2022
    • 21% of mortgages were arranged in the last year
    • Over-45s more likely to have arranged their current deal over five years ago
      • Figure 36: Timing of last mortgage purchase, 2022
  15. Mortgage Activity at Last Arrangement

    • Almost a quarter of mortgage holders purchased their first property
      • Figure 37: Reasons for taking out last mortgage, 2021-22
    • Mortgage owners were more likely to switch to a new deal with their existing lender
      • Figure 38: Reasons for taking out last mortgage, by timing, 2022
  16. Behaviours of Mortgage Owners

    • The vast majority found arranging their mortgage easy
    • Half of affluent mortgage owners made overpayments
      • Figure 39: Behaviours towards mortgages and homeownership, 2022
    • The appeal of green mortgages is not yet widespread…
    • …but mortgage owners would make their houses greener
      • Figure 40: Behaviours towards mortgages and homeownership, 2022
  17. Future Mortgage Intentions

    • A third of non-homeowners plan to buy their first property in the next two years
    • First-time buyer market was buoyant in 2021, but outlook is more uncertain
    • Mortgage owners are more likely to take out a new deal with the same lender
      • Figure 41: Future mortgage plans, 2022
  18. Sources of Funding for First Home Purchase

    • Over a third of aspiring homebuyers expect to use savings for the deposit
    • 24% of aspiring first-time buyers would borrow money from family or friends
      • Figure 42: Sources of funding and sources of funding by future mortgage plans, 2022
    • 30% of aspiring homebuyers expect to use multiple sources of funding
      • Figure 43: Repertoire analysis of sources of funding, 2022
      • Figure 44: Repertoire analysis of sources of funding, by sources of funding, 2022
  19. Attitudes towards Mortgages and Homeownership among Potential First-Time Buyers

    • The majority of non-homeowners worry about not being accepted for a mortgage
    • Renters are more likely to say it’s difficult to save for a deposit
    • Parents prefer to wait and buy a bigger first home
      • Figure 45: Attitudes of non-homeowners towards mortgages and homeownership, 2022
  20. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  21. Appendix: Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 46: Market forecast for gross mortgage lending, 2021-26
    • Market drivers and assumptions
    • 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.

Brand/Company

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

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

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