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UK Mortgage Market 2018: Forecasts and Future Opportunities

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Details

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 GBP338bn 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.

This report 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. It offers insight into-

- 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.

READ MORE

Table Of Content

Scope

Table of Contents

1. EXECUTIVE SUMMARY

1.1. Market summary

1.2. Key findings

2. THE MORTGAGE MARKET WITNESSED MODERATE GROWTH IN 2017

2.1. Supply-side factors will increase the pool of funds available for lending

2.1.1. Regulatory changes have dampened the appeal of the buy-to-let sector

2.1.2. First-time buyer numbers continue to grow as a result of government support

3. NICHE MORTGAGES WILL EXPERIENCE VARYING FORTUNES

3.1. Government intervention has reigned in buy-to-let lending

3.2. Shared equity activity will continue to grow, but at a slower rate

3.3. Shared ownership has been boosted by regulatory changes

3.4. Right to Buy will grow moderately over the next few years

3.5. Equity release will see double-digit growth throughout the forecast period

3.6. Self-build lending is unlikely to meet demand

3.7. Market volatility as a result of the UK's withdrawal from the EU could present opportunities for the secured lending market

3.8. Professional and graduate mortgages will continue to flatline

3.9. The appeal of Islamic home finance is broadening

4. PRODUCT VARIATIONS

4.1. Offset mortgage lending will decline

4.2. Sterling depreciation as a result of Brexit will buttress the large-value mortgage lending sector

4.3. Near-prime lending is expected to remain strong

5. APPENDIX

5.1. Abbreviations and acronyms

5.2. Definitions

5.2.1. BoE base rate

5.2.2. Gross advances

5.2.3. Remortgaging

5.3. Methodology

5.4. Secondary sources

5.5. Further reading


List Of Figure

List of Figures

Figure 1: Gross mortgage lending reached GBP257bn in 2017

Figure 2: Buy-to-let regulations have resulted in increased supply, creating opportunities for existing homeowners

Figure 3: Help to Buy has been instrumental in increasing the number of first-time buyers

Figure 4: Average earnings growth has started to outpace rental growth, providing positive economic conditions for first-time buyers

Figure 5: Buy-to-let gross advances will record slow growth over the forecast period

Figure 6: Shared equity lending will grow at an average of 14% over the forecast period

Figure 7: Shared ownership growth will remain in double digits over the forecast period

Figure 8: Right to Buy lending will rise at a stable pace over the forecast period

Figure 9: Growth in availability and demand will see equity release gross advances reach GBP7.6bn by 2022

Figure 10: Self-build lending growth will remain in the single digits over the forecast period

Figure 11: Secured lending will remain strong despite Mortgage Conduct of Business regulations

Figure 12: The lack of providers in the professional and graduate mortgage market will hold back growth

Figure 13: Rising awareness of Islamic finance will lead to growth in mortgage lending

Figure 14: Waning demand will result in the contraction of the offset mortgage sector

Figure 15: Large-value mortgage demand will be driven by wealthy foreign buyers

Figure 16: Near-prime lending will see impressive growth over the next few years

Licence Rights

Single User License:
Report can be used by individual purchaser only

Site License:
Report can be shared by unlimited users within one corporate location, e.g. a regional office

Corporate User License: 
Report can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company

Section Purchase

To know more information on Purchase by Section, please send a mail to support@kenresearch.com

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Products and Companies

Products

mortgages, buy to let, Right to Buy, self build, Sharia, offset, equity, mortgage, lending


Companies

Al Rayan Bank

Secure Trust Bank

Vida Homeloans and Masthaven

Virgin Money

Company Profile

Company Profile Title

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 GBP338bn 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.

This report 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. It offers insight into-

- 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.

READ MORE

Scope

Table of Contents

1. EXECUTIVE SUMMARY

1.1. Market summary

1.2. Key findings

2. THE MORTGAGE MARKET WITNESSED MODERATE GROWTH IN 2017

2.1. Supply-side factors will increase the pool of funds available for lending

2.1.1. Regulatory changes have dampened the appeal of the buy-to-let sector

2.1.2. First-time buyer numbers continue to grow as a result of government support

3. NICHE MORTGAGES WILL EXPERIENCE VARYING FORTUNES

3.1. Government intervention has reigned in buy-to-let lending

3.2. Shared equity activity will continue to grow, but at a slower rate

3.3. Shared ownership has been boosted by regulatory changes

3.4. Right to Buy will grow moderately over the next few years

3.5. Equity release will see double-digit growth throughout the forecast period

3.6. Self-build lending is unlikely to meet demand

3.7. Market volatility as a result of the UK's withdrawal from the EU could present opportunities for the secured lending market

3.8. Professional and graduate mortgages will continue to flatline

3.9. The appeal of Islamic home finance is broadening

4. PRODUCT VARIATIONS

4.1. Offset mortgage lending will decline

4.2. Sterling depreciation as a result of Brexit will buttress the large-value mortgage lending sector

4.3. Near-prime lending is expected to remain strong

5. APPENDIX

5.1. Abbreviations and acronyms

5.2. Definitions

5.2.1. BoE base rate

5.2.2. Gross advances

5.2.3. Remortgaging

5.3. Methodology

5.4. Secondary sources

5.5. Further reading


List Of Figure

List of Figures

Figure 1: Gross mortgage lending reached GBP257bn in 2017

Figure 2: Buy-to-let regulations have resulted in increased supply, creating opportunities for existing homeowners

Figure 3: Help to Buy has been instrumental in increasing the number of first-time buyers

Figure 4: Average earnings growth has started to outpace rental growth, providing positive economic conditions for first-time buyers

Figure 5: Buy-to-let gross advances will record slow growth over the forecast period

Figure 6: Shared equity lending will grow at an average of 14% over the forecast period

Figure 7: Shared ownership growth will remain in double digits over the forecast period

Figure 8: Right to Buy lending will rise at a stable pace over the forecast period

Figure 9: Growth in availability and demand will see equity release gross advances reach GBP7.6bn by 2022

Figure 10: Self-build lending growth will remain in the single digits over the forecast period

Figure 11: Secured lending will remain strong despite Mortgage Conduct of Business regulations

Figure 12: The lack of providers in the professional and graduate mortgage market will hold back growth

Figure 13: Rising awareness of Islamic finance will lead to growth in mortgage lending

Figure 14: Waning demand will result in the contraction of the offset mortgage sector

Figure 15: Large-value mortgage demand will be driven by wealthy foreign buyers

Figure 16: Near-prime lending will see impressive growth over the next few years

Single User License:
Report can be used by individual purchaser only

Site License:
Report can be shared by unlimited users within one corporate location, e.g. a regional office

Corporate User License: 
Report can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company

To know more information on Purchase by Section, please send a mail to support@kenresearch.com

INQUIRE FOR COVID-19 IMPACT ANALYSIS

Products

mortgages, buy to let, Right to Buy, self build, Sharia, offset, equity, mortgage, lending


Companies

Al Rayan Bank

Secure Trust Bank

Vida Homeloans and Masthaven

Virgin Money