UK Mortgage Market 2019: Forecasts and Future Opportunities to 2023

Table of Contents

1. EXECUTIVE SUMMARY

• 1.1. Market summary
• 1.2. Key findings
• 1.3. Critical success factors

2. THE MORTGAGE MARKET WAS SET FOR SLOW GROWTH IN 2019

• 2.1. Supply and demand factors will combine to deliver sustained growth
• 2.2. Supply-side factors will ensure stable growth in mortgage availability
  • 2.2.1. Regulatory interventions are reducing confidence in the buy-to-let market
  • 2.2.2. First-time buyers continue to benefit from Help to Buy
  • 2.2.3. The mortgage price war has also provided a boost to first-time buyers
  • 2.2.4. SOAHP will continue to support home ownership
• 2.3. Factors will exert both upside and downside pressures on demand
  • 2.3.1. Macroeconomic factors point towards a modest increase in demand
  • 2.3.2. Improving consumer confidence will boost demand for mortgages
  • 2.3.3. House price growth has been softening since the middle of 2016
• 2.4. Lloyds remains the biggest mortgage lender despite losing share
  • 2.4.1. The mortgage price war will continue to squeeze the profits of small players
• 2.5. Increased competition is resulting in visible signs of pressure in the UK mortgage market
• 2.6. There is plenty of scope for innovation in the mortgage market
  • 2.6.1. Molo offers a hassle-free way to take out a mortgage
  • 2.6.2. Tandem is the first provider to launch intelligent, co-created mortgages
  • 2.6.3. MoneySuperMarket’s Podium is an onsite digital mortgage broker
  • 2.6.4. Dashly partnered with Castlight Financial for an advanced affordability tool
  • 2.6.5. HM Land Registry service enables consumers to sign their mortgage deeds online
  • 2.6.6. Mortgage Brain offers affordability checker tool

3. NICHE MORTGAGES WILL EXPERIENCE VARYING FORTUNES

• 3.1. Buy-to-let activity remains under pressure
• 3.2. Shared equity will grow at a slower pace over the next few years
• 3.3. Shared ownership growth will be supported by staircasing reforms
• 3.4. Right to Buy will grow moderately over the next few years
• 3.5. Equity release is performing strongly at present
• 3.6. Self-build lending will remain a niche area for the foreseeable future
• 3.7. The secured lending market will accelerate at a rapid pace post-2020
• 3.8. Professional and graduate mortgage lending is stagnating
• 3.9. Islamic lending will benefit from improving credit supply and new products

4. PRODUCT VARIATIONS

• 4.1. Offset mortgage lending will decline
• 4.2. Large-value mortgage lending will return to its pre-crisis peak
• 4.3. Near-prime lending is one of the fastest-growing sectors

5. GREEN MORTGAGES: ASSESSING THE FEASIBILITY OF SUCCESS IN THE UK

• 5.1. The UK banking market offers a range of green-friendly products
  • 5.1.1. While there is a standard definition of green mortgages, the product takes many different forms
• 5.2. The market for green mortgages is still small, and most green mortgage providers are small lenders
• 5.3. Green mortgages are likely to remain a niche product
  • 5.3.1. The UK mortgage market is driven by price
  • 5.3.2. There is limited demand for green mortgages
  • 5.3.3. Very few lenders offer the product, thus limiting supply and product choices
  • 5.3.4. The green proposition is likely to provide a competitive advantage to lenders if a customer has to choose between two similarly priced products
• 5.4. Widespread uptake will require government and institutional commitment
  • 5.4.1. Some incentives have been put in place, but the market view is that they are not enough
  • 5.4.2. Realizing the potential of ethical and environmentally friendly products is a significant opportunity for banks
  • 5.4.3. Branches remain the most popular application channel for mortgage arrangement
  • 5.4.4. Sustained co-operation between lenders and the government is needed to grow the green mortgage market
  • 5.4.5. The UK needs to stimulate greater awareness of green building among the general public

6. APPENDIX

• 6.1. Abbreviations and acronyms
• 6.2. Definitions
  • 6.2.1. BoE base rate
  • 6.2.2. Gross advances
  • 6.2.3. Remortgaging
• 6.3. Methodology
  • 6.3.1. Market sizing and forecasts
  • 6.3.2. Future Sentiment Index
• 6.4. Secondary sources