The UK mortgage market has remained fairly flat over the last year. Product affordability has improved as funding conditions have remained stable. Providers are rolling out more products although competition is strongest for borrowers who are able to put down a larger deposit. There has been some moderate innovation but most new developments involve the return of older products.
The UK mortgage market has remained fairly flat over the last year. Product affordability has improved as funding conditions have remained stable. Providers are rolling out more products although competition is strongest for borrowers who are able to put down a larger deposit. There has been some moderate innovation but most new developments involve the return of older products.
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Features and benefits
- Understand how market share has developed through a comparison of 2009 and 2010 data and the strategies being undertaken by your rivals.
- Make informed market entry decisions by understanding how the mortgage market has developed and its likely future direction.
- Develop a deeper understanding of consumer attitudes towards different brands through analysis of Datamonitor’s proprietary consumer survey.
Highlights
Lloyds Banking Group saw the largest decrease in its share of gross lending while Barclays Group saw the largest increase, helped by its purchase of Standard Life’s mortgage arm. Yorkshire Building Society also saw a large increase in its gross lending, driven by some competitive offers.
Banks continue to dominate lending although both mutuals and specialist lenders have seen small growth over the last 12 months. The growth in the specialist lender market may in part be the result of borrowers who have been turned down by the mainstream lenders exploring other opportunities.
The wave of new entrants into the market has been held up by tougher FSA regulation and the intricacies of setting up a mortgage operation. Tesco and Virgin Money are seen as the most likely to shake up the industry but all players are likely to find it tough to build up scale quickly.
Banks continue to dominate lending although both mutuals and specialist lenders have seen small growth over the last 12 months. The growth in the specialist lender market may in part be the result of borrowers who have been turned down by the mainstream lenders exploring other opportunities.
The wave of new entrants into the market has been held up by tougher FSA regulation and the intricacies of setting up a mortgage operation. Tesco and Virgin Money are seen as the most likely to shake up the industry but all players are likely to find it tough to build up scale quickly.
Your key questions answered
- Which players are competiting the most heavily in the market, and how?
- Has there been much product innovation in the market?
- How has competition in the first time buyer market fared?
Table Of Contents
Executive Summary
The majority of the largest players saw a modest decline in their overall share of gross lending
Lloyds Banking Group maintained its position as the largest lender in 2010
The building society sector has seen further consolidation, but Nationwide remains a key player in the mortgage market
New and potential entrants will find it difficult to make a big splash in the mortgage market
Castle Trust is looking to offer a mortgage to encourage consumers with a smaller deposit
Lloyds Banking Group is strongest at cross-selling current accounts and mortgages
Lloyds TSB is the most successful at cross-selling mortgages and current accounts
Average mortgage rates have generally trended downwards since 2009
The majority of the largest players saw a modest decline in their overall share of gross lending
Lloyds Banking Group maintained its position as the largest lender in 2010
The building society sector has seen further consolidation, but Nationwide remains a key player in the mortgage market
New and potential entrants will find it difficult to make a big splash in the mortgage market
Castle Trust is looking to offer a mortgage to encourage consumers with a smaller deposit
Lloyds Banking Group is strongest at cross-selling current accounts and mortgages
Lloyds TSB is the most successful at cross-selling mortgages and current accounts
Average mortgage rates have generally trended downwards since 2009
OVERVIEW
Catalyst
Summary
Catalyst
Summary
MARKET OVERVIEW
The majority of the largest players saw a modest decline in their overall share of gross lending
Lloyds Banking Group maintained its position as the largest lender in 2010, with Santander holding onto second spot
Barclays has grown its market share through a competitive offering
Nationwide saw a negligible rise in gross lending, while HSBC and RBS saw small declines
The majority of large providers saw a small rise in their outstanding mortgage balances
Lloyds Banking Group saw outstanding balances fall to £341.1bn, while Nationwide also saw a drop
Santander, Barclays, RBS, and HSBC all grew their outstanding balances in 2010
Banks continue to dominate lending, with specialist lenders marginalized
Banks continue to dominate gross lending in the mortgage market
Outstanding balances have grown considerably among banks
Intermediaries have seen their share of mortgage lending decline over the last three years
An uncertain regulatory environment makes it difficult for lenders and intermediaries to focus on the future
The Mortgage Market Review remains a source of uncertainty for the industry
Buy-to-let coming under the auspices of the FSA could alter the landscape in the market
The majority of the largest players saw a modest decline in their overall share of gross lending
Lloyds Banking Group maintained its position as the largest lender in 2010, with Santander holding onto second spot
Barclays has grown its market share through a competitive offering
Nationwide saw a negligible rise in gross lending, while HSBC and RBS saw small declines
The majority of large providers saw a small rise in their outstanding mortgage balances
Lloyds Banking Group saw outstanding balances fall to £341.1bn, while Nationwide also saw a drop
Santander, Barclays, RBS, and HSBC all grew their outstanding balances in 2010
Banks continue to dominate lending, with specialist lenders marginalized
Banks continue to dominate gross lending in the mortgage market
Outstanding balances have grown considerably among banks
Intermediaries have seen their share of mortgage lending decline over the last three years
An uncertain regulatory environment makes it difficult for lenders and intermediaries to focus on the future
The Mortgage Market Review remains a source of uncertainty for the industry
Buy-to-let coming under the auspices of the FSA could alter the landscape in the market
COMPETITOR FOCUS
The UK’s five largest banks are fairly dominant in the market
Lloyds Banking Group remains the market leader in mortgages
Santander is in a strong position to grow market share over the next year
RBS has sought to maintain its lending levels
The acquisition of Standard Life’s retail business and a strong product offering boosted Barclays’ market share
HSBC managed to hold onto the gains in market share that it made during the financial crisis
The building society sector has seen further consolidation, but Nationwide remains a key player in the mortgage market
Nationwide Building Society saw its share of lending grow in 2010
Yorkshire Building Society has been actively boosting its competitive edge
Coventry Building Society has launched capped tracker mortgages
New and potential entrants will find it difficult to make a big splash in the mortgage market
Precise Mortgages initially launched in the buy-to-let market
Aldermore, NBNK, and Metro remain small players in the mortgage arena
Castle Trust is looking to offer a mortgage to encourage consumers with a smaller deposit
Tesco’s entry into the mortgage market continues to suffer setbacks
Virgin Money’s mortgage presence would be boosted through the acquisition of Lloyds’ branch network
Portillion has suffered delays as it awaits FSA approval
Advertising expenditure saw growth in 2010, indicating the return of competition to the market
The impact of the credit crunch saw mortgage advertising fall heavily between 2007 and 2010
Lloyds Banking Group leads in terms of mortgage advertising expenditure
Mortgage providers are keen to illustrate the success of their products at picking up awards
Lloyds Banking Group is strongest at cross-selling current accounts and mortgages
NatWest has the highest proportion of borrowers in the under-35 age band
Banks rely on building up relationships through cross-selling in order to boost profits
Around 15% of First Direct customers switched their mortgage from a different lender
Direct remains the most popular channel for most providers except Northern Rock
The UK’s five largest banks are fairly dominant in the market
Lloyds Banking Group remains the market leader in mortgages
Santander is in a strong position to grow market share over the next year
RBS has sought to maintain its lending levels
The acquisition of Standard Life’s retail business and a strong product offering boosted Barclays’ market share
HSBC managed to hold onto the gains in market share that it made during the financial crisis
The building society sector has seen further consolidation, but Nationwide remains a key player in the mortgage market
Nationwide Building Society saw its share of lending grow in 2010
Yorkshire Building Society has been actively boosting its competitive edge
Coventry Building Society has launched capped tracker mortgages
New and potential entrants will find it difficult to make a big splash in the mortgage market
Precise Mortgages initially launched in the buy-to-let market
Aldermore, NBNK, and Metro remain small players in the mortgage arena
Castle Trust is looking to offer a mortgage to encourage consumers with a smaller deposit
Tesco’s entry into the mortgage market continues to suffer setbacks
Virgin Money’s mortgage presence would be boosted through the acquisition of Lloyds’ branch network
Portillion has suffered delays as it awaits FSA approval
Advertising expenditure saw growth in 2010, indicating the return of competition to the market
The impact of the credit crunch saw mortgage advertising fall heavily between 2007 and 2010
Lloyds Banking Group leads in terms of mortgage advertising expenditure
Mortgage providers are keen to illustrate the success of their products at picking up awards
Lloyds Banking Group is strongest at cross-selling current accounts and mortgages
NatWest has the highest proportion of borrowers in the under-35 age band
Banks rely on building up relationships through cross-selling in order to boost profits
Around 15% of First Direct customers switched their mortgage from a different lender
Direct remains the most popular channel for most providers except Northern Rock
PRODUCT FOCUS
Average mortgage rates have generally trended downwards since 2009
Lenders are offering more competitive rates across the market
There has been some innovation, although much of it is simply a return to previous practices
Cashback on mortgage deals is becoming more popular
Drop-lock mortgages provide consumers with more security regarding their monthly payments in an unstable economic environment
Barclays’ Great Escape remortgage product gives borrowers a cheaper way out of an existing deal
Split mortgage deals allow borrowers to hedge their bets on market developments
Fee-free mortgages are making a comeback
Capped tracker mortgages remain a niche product
Lenders are slowly returning to the first-time buyer market
The number of mortgage deals is increasing
First-time buyer mortgages are becoming more prevalent
Lenders are offering borrowers the chance to increase their deposit with outside help
Average mortgage rates have generally trended downwards since 2009
Lenders are offering more competitive rates across the market
There has been some innovation, although much of it is simply a return to previous practices
Cashback on mortgage deals is becoming more popular
Drop-lock mortgages provide consumers with more security regarding their monthly payments in an unstable economic environment
Barclays’ Great Escape remortgage product gives borrowers a cheaper way out of an existing deal
Split mortgage deals allow borrowers to hedge their bets on market developments
Fee-free mortgages are making a comeback
Capped tracker mortgages remain a niche product
Lenders are slowly returning to the first-time buyer market
The number of mortgage deals is increasing
First-time buyer mortgages are becoming more prevalent
Lenders are offering borrowers the chance to increase their deposit with outside help
APPENDIX
Supplementary data
Definitions
Balances outstanding
Bank of England base rate
Gross advances
Methodology
Further reading
Ask the analyst
Disclaimer
Supplementary data
Definitions
Balances outstanding
Bank of England base rate
Gross advances
Methodology
Further reading
Ask the analyst
Disclaimer
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