UK Mortgages: Competitive Landscape and Product Innovation

  • DATAMONITOR VIEW
    • Catalyst
    • Summary
  • STRATEGIC CONTEXT
    • Bigger lenders are losing market share to smaller lenders
      • HSBC has increased its share of the market despite tighter regulations and the eurozone crisis
      • LBG retains its position as the biggest mortgage lender despite losing market share
      • Santander's market share fell but it remains the second biggest lender in the UK
      • Barclays' market share has stabilized following a sharp increase
      • RBS has cut its lending significantly
    • Big bank lending has been depressed by regulatory requirements and the eurozone crisis
      • The eurozone crisis has pushed up the cost of interbank lending and will constrain mortgage lending
    • Small lenders increased their mortgage approvals by more than the industry average
      • Banks dominate but mutuals have increased their market share
      • The decline in the number of building societies appears to have bottomed out
    • New entrants and potential entrants will struggle to make a big impact on the mortgage market
      • Virgin Money's presence has been boosted by the acquisition of Northern Rock
      • Tesco's entry into the market continues to be delayed
      • Recent entrants have failed to revolutionize the market
      • New and recent entrants have been hampered by funding and branding problems
    • Mortgage Market Review proposals to ban non-advised sales may benefit brokers
  • STRATEGY IN FOCUS
    • Average mortgage rates have increased recently due to pressures in the wholesale markets
      • Lenders are increasing standard variable rates as funding costs bite
    • Greater competition and product innovation has followed market stabilization
      • Aldermore is offering borrowers the option to use parents for 100% loan-to-value mortgages
      • Nationwide and Halifax are encouraging first-time buyers to develop a savings habit before offering a high LTV mortgage
      • Offering cashback on mortgages is becoming popular with lenders
      • The NewBuy Guarantee scheme is too small in scope to have more than a marginal effect
      • Regulations are causing lenders to limit the sale of interest-only mortgages
  • APPENDIX
    • Supplementary data
    • Methodology
    • Definitions
      • Bank of England base rate
      • CAGR
      • Gross advances
      • Remortgaging
      • RMBS
    • Further reading
    • Ask the analyst
    • Disclaimer
  • TABLES
    • Table: Average mortgage rates, January 2010 to March 2012
  • FIGURES
    • Figure: Four of the big five UK banks lost market share in 2011
    • Figure: Smaller lenders increased lending by more than the market average
    • Figure: Mutuals and specialist lenders have increased their market share
    • Figure: Building society numbers have stabilized after a period of consolidation
    • Figure: The Skipton and Yorkshire building societies have been the most active in the mergers and acquisitions sector
    • Figure: Average mortgage rates have started to rise despite a static base rate

Report

Published by
Datamonitor
Published on
11 May 2012
Product code
CM00209-002
Pages
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