The report titled “UK Mortgage Market 2017: Forecasts and Future Opportunities”, provides a comprehensive analysis of UK mortgage market overview, sluggish wage growth, less consumer spending limit, government introduced schemes, hike in interest rates, and untouched mortgage rates may witness a slight growth in mortgage market in UK.
Mortgage Market Overview in UK: Mortgage market offers loans to people or organizations to purchase property which are later traded as asset-backed securities by financial institutions. United Kingdom has witnessed a weak economic growth and a fall in unemployment rate with stagnant productivity that led to a sluggish wage growth. This has led to consumer’s lower spending power and is likely to continue in the current year with rise in inflation. It was observed that the UK consumers are saving less rather than borrowing and the growth in personal deposits has slowed along with consumer credit borrowing.
The housing market activity is growing modestly with the first-time buyers opting for new-build properties using the Help to Buy equity loan scheme. UK government has planned schemes that aimed predominantly at first-time buyers who can boost the number of purchases in housing market. The government schemes are less benefitting and majority of the consumers are struggling to find suitable homes. Such consumers are not putting their own homes up for sale due to less benefit. The UK government intervention coupled with its regulations in buy-to-let space has led to a declined market. The remortgage category has witnessed a strong competition and low funding costs that meant an increasing number of home-owners are taking advantage of the low mortgage rates.
Economists Words: The economists in UK are warning that the decline in mortgage market could be the start of a downturn in the UK housing market. It was observed that the mortgage approvals have declined drastically over the past few months. UK economist at consultancy Pantheon Macroeconomics, says that the decline in mortgage market is due to the Bank of England’s decision to raise the interest rates. It was estimated that increase in the interest rates is the biggest downtrend in the mortgage market in UK because consumer’s confidence has weakened. However, the cut in stamp duty may witness a slight growth in the mortgage market in UK and the price of the houses may increase. The hike in interest rates will affect the housing market activity but the mortgage rates are still at historically very low levels. Therefore, untouched mortgage rates could have any significant effect on housing market psychology.
Leading Players and Future of UK Mortgage Market: The leading companies in UK’s Mortgage market are Stafford Railway Building Society and Tipton & Coseley Building Society, Al Rayan Bank, Mortgagegym, NatWest, Secure Trust Bank, The Mortgage Lender, Foundation Home Loans, Vida Homeloans and Masthaven, and Pepper Homeloans. An increased supply of new homes, stamp duty relief for first-time buyers, and tighter controls on buy-to-let lenders matters for first-time buyers by reducing investor demand for properties will witness an improvement in the mortgage market in the UK. The political uncertainty has dampened the country’s economy prospects. With shrinkage in real wages, rapid growth in consumer credit and high levels of household debt will limit the consumer’s capacity to opt for higher levels of mortgage debt over the coming years.
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Ankur Gupta, Head Marketing & Communications
ankur [@] kenresearch.com