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Mortgage Lending in the UK - Key Trends and Opportunities to 2020

Mortgage Lending in the UK - Key Trends and Opportunities to 2020

Synopsis

A surge in mortgage lending was recorded during the second half of 2015, as customers took advantage of low interest rates, with the Governor of the Bank of England, Mark Carney, suggesting in November 2015 that the central bank rate may not rise until 2017.

Summary

  • The Buy-to-Let sector recorded substantial growth in 2015, as investors increasingly looked towards property in the absence of any favorable savings rates. With house prices continuing to rise and the buy-to-let making becoming a landlord more affordable this type of mortgage has risen from being a twentieth of all mortgages to a fifth in a single year. The availability of high loan-to-value (LTV) mortgages and even interest-only mortgages, combined with pension reforms in the March 2015 Budget − allowing over 55s to receive a lump sum instead of annuities − sparked the growth.
  • Mortgage affordability eased during the recession as the Bank of England reduced its policy interest rate to a record-low of 0.5% in 2009, and Funding for Lending provided 18 months of access to cheap bank finance. This prompted retail lenders to lower interest rates on tracker and fixed-rate mortgages during the review period (2009–2014), leading to lower-value loan repayments from 2009 onwards.
  • This trend continued in 2015, as HSBC became the first lender to launch a sub-2% five-year fixed mortgage in April, which triggered price war between lenders. Rates continued to plunge in 2015, with the average 75% two-year LTV mortgages as cheap as 1.6%. This has been a substantial factor behind driving the gross lending and the repayments markets, as consumers have been keen to lock themselves into the attractive rates.
  • A surge in mortgage lending was recorded during the second half of 2015, as customers took advantage of low interest rates, with the Governor of the Bank of England, Mark Carney, suggesting in November 2015 that the central bank rate may not rise until 2017. Total gross lending increased by 29.4% in 2015.
  • Although it looks as if the central bank rate will not rise until as late as 2017, the rate will increase at some point over the forecast period (2015−2019), which will increase repayment costs. The Mortgage Market Review (MMR) includes measures to check that all borrowers are able to afford the cost of any potential hike, so interest rate increases are likely to suppress growth in the market, if only temporarily.
  • With the demand for mortgages being so high, any interest rate hike is unlikely to lead to a decline in gross mortgage lending, although repayments are more likely to drop off as customers begin to struggle to make them.
  • Lending to first-time buyers had declined year-on-year to April 2015 following the implementation of the MMR in April 2014. The review includes measures to check that all borrowers can afford the cost of any potential hike, to the extent of looking through online bank statements and credit ratings, have made it harder for many to get on the property ladder.
  • The boom in buy-to-let lending has created a very saturated market with direct competition for first-time buyers, and it has certainly contributed to rising house prices, especially in London. Lending to first time buyers increased by 10% year-on-year to September 2015, as real wages continues to improve and demand remained strong.
Scope
  • This report provides market analysis, information and insights into the UK mortgage industry
  • It provides a breakdown of the types of mortgages offered in the UK
  • It analyses drivers and the outlook for the market
  • It provides information on the main banks in the UK market
  • It covers news and regulatory developments
  • It forecasts the future of the mortgage industry in the UK over the next five years
Reasons To Buy
  • Gain an understanding of the UK mortgage industry.
  • See monthly and annual statistics on every aspect of the market, both in written form and in graphs and tables.
  • Read analysis of the relevant market statistics, telling you what has been happening in the mortgage market, why it
  • has been happening and what we expect to happen over the coming years.
  • Read about all the economic factors impacting the industry.
  • Read about how individual banks and building societies are affecting the market, in terms of market share and innovation.
Key Highlights
  • Gross mortgage lending totaled GBP204.5 billion in 2014, representing a 15.0% increase over 2013.
  • This was the second-fastest annual growth rate recorded during the review period, after slowing from 22.3% the previous year.


  • Executive Summary
  • Introduction
    • What is this Report About?
    • Definitions
      • Table Mortgage Market Definitions
    • Methodology
  • Market Analysis
    • Gross Lending
      • By lender
      • By purpose
    • Outstanding Loans
    • Repayments
    • Net Lending
    • Mortgage Approvals
      • By value
      • By volume
      • Loan-to-value ratio
    • Mortgage Arrears
    • Interest Rates
    • Buy-to-Let Mortgages
    • First-Time Buyers
    • Mortgage Market Summary
      • Table The UK - Mortgage Market Summary (GBP Billion), 2009-2013
  • Market Outlook
    • Forecasts
  • Economic Backdrop
    • Housing market
    • Real GDP growth
    • Labor Market Conditions
    • Central Bank Rate
    • Consumer Confidence
    • Inflation
  • Competitive Landscape
    • Market Shares
    • Mortgage Interest Rates
      • Table The UK Mortgage Market- Competitor APR (%), Financial Year 2014/15
    • Mortgage Innovation
  • Regulation and Policy
    • Recent Changes
      • Help-to-Buy
      • MMR
    • Upcoming Regulations
      • Mortgage Credit Directive
      • Basel III
        • Table Recent and Upcoming Regulatory Changes
  • Deals
    • Zopa partners with Metro Bank
    • Nationwide Building Society Prices Offering of USD1.12 Billion Bond Due 2018
    • OneSavings Bank Acquires Portfolio of UK Second-Charge Mortgages
    • Legal & General to Acquire 100% Stake in New Life Home Finance
  • News
    • Nationwide:Strong Products and Customer Service Deliver Best Ever Results
    • Axis Bank to Launch Buy-to-LetMortgage Product in UK
    • UK House Price Expectations fall to 18-Month Low: Knight Frank
  • UK Retail Banks
    • Barclays Plc - Company Overview
      • Barclays Plc - profile
        • Table Barclays Plc, Key Facts
      • Barclays PLC - main savings products
        • Table Barclays Plc, Main Savings Products
      • Barclays Plc - main competitors
      • Barclays Plc -board of directors
        • Table Barclays Plc, Board of Directors
    • HSBC Plc - Company Overview
      • HSBC Bank Plc - profile
        • Table HSBC Bank Plc, Key Facts
      • HSBC Bank Plc - main savings products
        • Table HSBC Bank Plc, Main Savings Products
      • HSBC Bank Plc - main competitors
      • HSBC Bank Plc - board of directors
        • Table HSBC Bank Plc, Board of Directors
    • Lloyds Banking Group Plc - Company Overview
      • Lloyds Banking Group Plc - profile
        • Table Lloyds Banking Group Plc, Key Facts
      • Lloyds Banking Group Plc - main savings products
        • Table Lloyds Banking Group Plc, Main Products
      • Lloyds Banking Group Plc - main competitors
      • Lloyds Banking Group - board of directors
        • Table Lloyds Banking Group Plc, Board of Directors
    • National Savings and Investments - Company Overview
      • National Savings and Investments - profile
        • Table National Savings and Investments, Key Facts
      • National Savings and Investments - main savings products
        • Table National Savings and Investments, Main Products
      • National Savings and Investments - main competitors
      • National Savings and Investments - board of directors
        • Table National Savings and Investments, Board of Directors
    • Nationwide Building Society - Company Overview
      • Nationwide Building Society - profile
        • Table Nationwide Building Society, Key Facts
      • Nationwide Building Society - main savings products
        • Table Nationwide Building Society, Main Products
      • Nationwide Building Society - main competitors
      • Nationwide Building Society - board of directors
        • Table Nationwide Building Society, Board of Directors
    • Santander UK Plc - Company Overview
      • Santander UK Plc - profile
        • Table Santander UK Plc, Key Facts
      • Santander UK Plc - main savings products
        • Table Santander UK Plc, Main Products
      • Santander UK Plc - main competitors
      • Santander UK Plc - board of directors
        • Table Santander UK Plc, Board of Directors
    • The Royal Bank of Scotland Group - Company Overview
      • The Royal Bank of Scotland Group Plc - profile
        • Table The Royal Bank of Scotland Group Plc, Key Facts
      • The Royal Bank of Scotland Group Plc - main savings products
        • Table The Royal Bank of Scotland Group Plc, Main Products
      • The Royal Bank of Scotland Group Plc - main competitors
      • The Royal Bank of Scotland Group Plc - board of directors
        • Table The Royal Bank of Scotland Plc, Board of Directors
  • Statistics
    • Forecast Period: 2014-2018
      • Table The UK - Mortgages Market 2014-2018
  • Appendix
    • Methodology
    • Contact Timetric
    • About Timetric
    • Timetric's Services
    • Disclaimer

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