- Published: August 2008
- Region: Great Britain, United Kingdom
UK Mortgage Market in 2012 and Future Outlook
- Published: March 2012
- Region: United Kingdom, Great Britain
- 22 Pages
This brief presents a review of the UK mortgage market in 2011, examines in detail the various demand- and supply-side factors that will determine the outlook of the market, and offers the forecast for gross mortgage lending up to 2016.
Gross mortgage lending was depressed in 2011 and pointed towards a fragile and uncertain market. Key demand-side and supply-side factors have continued to deteriorate in 2012, heightening the need to analyze the outlook for the mortgage market. A lack of funding will restrict the ability of providers to increase lending, and demand will be adversely affected by low consumer confidence.Sculpt more targeted strategies by utilizing the analysis of key mortgage market developments.Use Datamonitor's forecasts to help inform your future plans.Increase client acquisition and retention through greater understanding of the factors affecting consumers' decision to take-out mortgages.Be prepared in an uncertain environment by utilizing Datamonitor's worst case scenario forecast.
Ongoing problems in the eurozone, regulatory changes, and rising costs in the wholesale markets will constrain the supply of funding. The biggest single factor is the trend towards deleveraging as lenders come under greater pressure to increase their capital reserve ratios.
The demand for mortgages will remain weak in 2012 because of low consumer confidence, concern over the state of the economy, and the cost and availability of lending. A combination of a shortage in supply and lacklustre demand means that gross lending looks set to remain depressed over the short and medium term.
A new forecasting model better accounts for the key factors affecting the demand for mortgages and the supply of mortgage lending, and assesses their relative importance to determine the magnitude of their impact on the market in 2012 and beyond.
Datamonitor offers a main gross lending forecast and a separate worst case scenario forecast.
Questions Answered Include:
- What were the main developments in the mortgage market in 2011?
- How will regulatory changes affect the mortgage market?
- What sources of funding can providers exploit in order to lend?
- What factors will affect consumer demand for mortgages? SHOW LESS READ MORE >
-2011 was another weak year for the UK mortgage market
The mortgage market has been squeezed on both the demand and supply sides
The base rate failed to rise in line with market expectations
Mortgage interest rates did not change significantly in
House prices stabilized after the crash of
Buy-to-let is the only major sector of the market that saw significant growth in
-Market conditions will remain challenging in
-Supply-side factors will restrict the pool of funds available for lending
Basel III will restrict the ability to lend
The MMR will add to restrictions around mortgage lending
The eurozone crisis has adversely affected the availability of funds
Reliance on retail deposits for funding has grown
Securitization funding is still weak
The higher risk mortgage sector is barely operating
The European Central Bank's low cost credit expansion will only have a short-term soothing effect
Government support schemes will close in
-Demand-side factors have caused a collapse in consumer confidence
The poor state of the UK economy has held back consumer demand for mortgages
The record low base rate will continue to depress remortgaging activity
Consumers are deleveraging
Rising unemployment will decrease demand
NewBuy Guarantee is set to offer help for purchases of new-build properties
The end of the stamp duty holiday will reduce demand among first-time buyers
-Datamonitor forecasts a sluggish market for gross mortgage lending
Datamonitor predicts that gross lending will rise to £200bn by 2016 under its default assumptions
Mortgage lending will contract much more sharply if events in the eurozone enter crisis phase
Bank of England base rate
-Ask the analyst
-Table: Net percentage balance of lenders reporting improvements in credit availability based on changing cost and availability of funds, Q2 2007–Q4
-Table: Nationwide Consumer Confidence Index, January 2007 to January
-Table: Net percentage balance of lenders reporting increase in consumer demand for remortgage credit (%), Q2 2007–Q4
-Table: Forecast gross advances – main forecast, 2011–16f
-Table: Forecast gross advances – worst case forecast, 2011–13f
-Figure: Datamonitor's theoretical model for forecasting mortgage gross advances
-Figure: Issues with cost and availability of funds have reduced the availability of secured credit
-Figure: Consumer confidence drifted further downwards over the course of
-Figure: Demand for remortgage credit fell in the second half of
-Figure: Under the main forecast, gross advances will fall in 2012 and recover slowly
-Figure: Under the worst case forecast, gross advances will contract steeply and recover very slowly
- Bank of England