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The UK Mortgage Market in 2011 and Future Outlook
Datamonitor, March 2011, Pages: 45
Introduction
The UK mortgage market continued to suffer from the after effects of the credit crunch in 2010. A lack of funding restricted the ability of providers to increase lending, and demand was adversely affected low consumer confidence. Matters are unlikely to improve in 2011, and the best that can be hoped for is a slow and gradual recovery.
Features and benefits
- Summarizes the main macroeconomic and regulatory developments affecting the mortgage market.
- Assesses the impact of interest rate movements, funding constraints, increased regulation and other factors upon the mortgage market.
- Sets out Datamonitor’s gross lending forecasts for the period 2011-2015.
Highlights
- Remortgaging activity was slow throughout 2010, as borrowers remained inclined to remain on low standard variable rates. However, renewed speculation about possible rises in the base rate over the next few months could help to fuel a partial recovery in this market.
- House prices will, at best, remain static in 2011, as consumer demand for housing falls in response to higher taxation, spending cuts and decreasing real incomes. This will limit the amount of equity many homeowners have in their properties, reducing their ability to remortgage or move home. Providers may also be less inclined to lend as a result
- Funding remains problematic. New securitizations are scarce, and are not keeping pace with redemptions. Lenders will also have to deal with the winding down of government support through the Special Liquidity Scheme and Credit Guarantee Scheme. Forthcoming Basel guidelines will severely restrict the ability of banks to lend at high loan-to-values.
Your key questions answered
- Understand the key factors that will drive the mortgage market in 2011 and beyond.
- Assess the prospects for an increase in lending activity in 2011.
- Use Datamonitor’s forecasts to help inform your future plans.
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