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UK Mortgage Market 2017: Forecasts and Future Opportunities

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UK Mortgage Market 2017: Forecasts and Future Opportunities


While the market has recovered well since the financial crisis, often growing by a double-digit percentage year-on-year, rising economic uncertainties will dampen the prospects for future growth over the coming years. During 2017-21, gross advances are expected to record a CAGR of 5.7%, reaching 327.0bn by the end of the forecast period.

On the supply side, an increased supply of new homes, stamp duty relief for first-time buyers, and tighter controls on buy-to-let lenders will improve matters for first-time buyers by reducing investor demand for properties. Legislative changes in the buy-to-let sector such as higher stamp duty and stricter underwriting standards will act as a drag on future growth, in what has been the standout sector in the years since the financial crisis.

Political uncertainty arising from the Brexit negotiations has dampened the economy'sprospects. At the same time, real wages are shrinking as annual pay increases fail to keep pace with rising inflation. Combined with the rapid growth in consumer credit and ensuing high levels of household debt, this will limit the capacity of consumers to take on significantly higher levels of mortgage debt.

This report offers five-year gross lending forecasts for residential and niche mortgages up to 2021, along with a detailed examination of the various demand- and supply-side factors that will determine the market outlook. It offers insight into

The key macroeconomic, regulatory, and other factors that will drive the demand for and supply of mortgages over the next five years.

The outlook for niche sectors, including buy-to-let, equity release, shared ownership, shared equity, and self-build.


The impressive growth in buy-to-let lending as seen over the last few years has come to a sudden halt, and is unlikely to resume in the near future.

Equity release continues to enjoy much success, with lending showing significant year-on-year growth. Prospects for further growth are healthy, with several years' worth of property price rises leaving borrowers with plenty of capital value to unlock, while the cost of equity release products is falling.

Lending on shared ownership properties will see huge percentage increases over the forecast period, largely off the back of the government'snew Affordable Homes Programme 2016-21. An estimated 135,000 shared ownership homes will be built under this scheme, thus fueling a boom in associated mortgage lending.

Reasons to Buy

Develop more targeted strategies through the 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.

Benchmark yourself against competitors and ensure you remain competitive as new innovations begin to enter the market.

Be prepared for how regulation will impact the mortgage market over the next few years.


Table Of Content


Table of Contents


1.1. Market summary

1.2. Key findings

1.3. Critical success factors


2.1. Gross mortgage lending is forecast to reach �327bn by 2021

2.2. Supply and demand factors will combine to ensure moderate future growth

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

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

2.3.2. First-time buyers will benefit from the stamp duty land tax relief

2.3.3. The Help to Buy extension delivered a big boost to first-time buyers

2.3.4. The Shared Ownership and Affordable Homes Programme marks a decisive shift towards support for home ownership

2.3.5. Support for mortgages under the Funding for Lending Scheme will end in January 2018

2.4. Factors will exert both upside and downside pressures on demand

2.4.1. The government is taking a new approach to stimulating housing supply

2.4.2. First-time buyers get a boost from the Lifetime ISA

2.4.3. The UK economy will slow, modestly impacting demand for mortgages

2.4.4. Low consumer confidence will impact demand for mortgages

2.4.5. House-price growth is well below the pace of recent years

2.4.6. Rate rises will boost remortgaging activity in the short term

2.5. Brexit'spotential impact on the mortgage market

2.5.1. Demand for home finance has been impacted

2.6. Industry stakeholders are embracing innovation to thrive in the mortgage market

2.6.1. MortgageGym aims to speed up loan applications

2.6.2. NatWest is the first provider to offer online paperless mortgages


3.1. Government intervention will rein back buy-to-let lending

3.2. Shared equity activity will remain stable, driven by the Help to Buy scheme

3.3. Shared ownership growth will be supported by the Affordable Homes Programme

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

3.5. Equity release will see double-digit growth up to 2021

3.6. Regulatory changes will boost self-build lending

3.7. The secured lending market will accelerate after a disappointing end to 2016

3.8. Professional and graduate mortgages will continue to flatline 3

3.9. Islamic home finance will enjoy strong growth 3


4.1. Offset mortgage lending will grow in line with the overall market 3

4.2. Stamp duty changes are depressing large-value mortgage lending 3

4.3. Near-prime lending is expected to remain strong 3


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

5.3.1. Future Sentiment Index

5.4. Bibliography

5.5. Further reading

List Of Figure

List of Figures

Figure 1: Gross mortgage lending reached �245bn in 2016

Figure 2: The buy-to-let market has been more volatile given the recent tax changes

Figure 3: First-time buyer lending rose by 10% in Q1 2017 compared to the same period of 2016

Figure 4: The pace of new-build development is slow

Figure 5: Key macroeconomic indicators predict a slowdown in growth in the mortgage market

Figure 6: Consumer confidence recovered in early 2017, but slipped in October

Figure 7: UK house price growth is well below its recent average

Figure 8: Transactions fell in the immediate aftermath of the referendum and Brexit has potential for further impact

Figure 9: MortgageGym provides detailed insight into the range of mortgages available within 60 seconds

Figure 10: NatWest'sdigital mortgage offers can be made within 24 hours

Figure 11: Buy-to-let gross advances will record slow growth over the forecast period

Figure 12: Shared equity lending will grow at an average of 9% over the forecast period

Figure 13: Shared ownership has been boosted by the Affordable Homes Programme

Figure 14: Right to Buy lending will rise at a stable pace over the forecast period

Figure 15: Equity release lending will grow by 27% on average during 2017-21

Figure 16: The self-build market is set to grow between 5-7% over the forecast period

Figure 17: Secured lending will remain strong despite the new Mortgage Credit Directive 3

Figure 18: The lack of providers in the professional and graduate mortgage market will hold back growth 3

Figure 19: Rising awareness of Islamic finance will lead to growth in mortgage lending 3

Figure 20: Offset lending will hold its own in relation to the overall market 3

Figure 21: Large-value mortgage demand will come from wealthy foreign buyers 3

Figure 22: Near-prime lending will see impressive growth rates over the next few years 3

List Of Table

List of Tables

Table 1: Stamp duty changes for first-time buyers

Table 2: Mortgage completions from October 2013 to December 2016, by type of borrower

Table 3: Mortgage completions from October 2013 to December 2016, by property value

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Products and Companies


Stafford Railway Building Society and Tipton & Coseley Building Society

Al Rayan Bank



Secure Trust Bank

The Mortgage Lender

Foundation Home Loans

Vida Homeloans and Masthaven

Pepper Homeloans