UK Mortgage Market 2018: Forecasts and Future Opportunities

UK Mortgage Market 2018: Forecasts and Future Opportunities

Summary

The mortgage market has recovered well since the financial crisis, often producing double-digit growth each year. However, rising economic uncertainties will dampen the prospects for future growth over the coming years. During the forecast period (2018-22), gross advances are expected to record a compound annual growth rate (CAGR) of 4.2%, reaching £338bn by the end of the forecast period versus a historic five-year CAGR of 7.6% from 2013 to 2017.

On the supply side, an increased supply of new homes, stamp duty relief for first-time buyers, and the extension of the Help to Buy equity loan scheme will improve matters for first-time buyers. More withdrawals in the buy-to-let sector by landlords are expected over the next two years, increasing the supply of properties available to both existing homeowners and first-time buyers.

Political uncertainty arising from the Brexit negotiations has weighed on economic growth, and is likely to continue to do so over the forecast period. But high levels of employment, rising wages, and slower private rental growth - combined with significant government intervention in the housing market - will ensure moderate growth over the forecast period.

The report UK Mortgage Market 2018: Forecasts and Future Opportunities, offers five-year gross lending forecasts for residential and niche mortgages up to 2022, along with a detailed examination of the various supply-side factors that will determine the market outlook.

Key Highlights

• The Right to Buy sector will be supported by the scheme’s extension to housing association tenants and the government’s lifting of the Housing Revenue Account cap, enabling local authorities to increase borrowing to invest in new housing stock.
• Buy-to-let lenders are adapting to margin compression by including non-rental income in affordability assessments. As mortgage interest tax relief is removed, demand for top-slicing products will increase.
• The number of equity release products is growing rapidly to meet consumer demand. Prospects for further growth are strong, with several years’ worth of property price rises leaving borrowers with plenty of capital value to withdraw.
• The removal of restrictive criteria and increased consumer awareness, combined with substantial government funding, will see the shared ownership sector grow significantly over the forecast period.

Scope

• The key macroeconomic, regulatory, and other factors that will drive the supply of mortgages over the next five years.
• The outlook for niche sectors, including buy-to-let, equity release, shared ownership, shared equity, Right to Buy, Sharia-compliant, and self-build.

Reasons to buy

• Develop more targeted strategies through analysis of key mortgage market developments.
• Inform your future plans with our five-year forecast of gross advances for niche product lines.
• Analyze trends with details of historic gross advances across a range of specialist mortgage sectors and product types.