Competitive Dynamics in the UK Mortgage Market 2008

2007 proved to be one of the most challenging years in recent times for UK mortgage lenders, as the later part of 2007 saw the mortgage sector being marred by liquidity issues. While mortgage lending reached record levels in 2007, it is expected to fall significantly in 2008. Who will be the winners and losers of the most difficult year of the UK mortgage market in the last decade?

Report Highlights
The biggest UK mortgage lender has steadily been losing share over the last seven years. The lender held nearly a quarter of total gross lending in 2001. This figure was down to 19.9% by 2007.

Most major lenders attributed their 2007 good results to a mixture of competitive pricing and good retention strategies.

With fewer products available on the market and consumer demand remaining strong, the dynamics are changing. Lenders are currently in a position where they can charge higher prices without this affecting demand.
[Studien Infos ausblenden]

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Most top 10 mortgage lenders grew their business over a record 2007 mortgage market 2
Nationwide recorded the biggest growth in gross lending among the top 10 mortgage lenders 2
HBOS's focus shift to profitability rather than volume has seen the lender lose share over the years 3
All top 10 mortgage lenders increased their mortgage balances over 2007 4
Competitive pricing and good retention strategies are behind lenders' 2007 success 6
The credit crunch is changing the competitive landscape of the UK mortgage market 6
The number of mortgage lenders operating in the UK market has declined over the space of a year 6
Small building societies continue to dominate in terms of number 7
The liquidity squeeze is leading to higher margins 8
While the major lenders have increased the rates on their two-year fixed rates, SVRs have gone down 10
Lenders who are willing to compete on prices will increase their market share 10
HSBC extended its Rate Matcher service to non-HSBC customers 10
Abbey capitalized on strong funding position and increased its gross lending market share in Q1 2008 11
Nationwide has re-priced its short-term fixed rate mortgages to make them more attractive 12
There will be a number of changes in movements of mortgage lenders' market share in 2008 12
Northern Rock's nationalization means that it can not compete on a level footing with other lenders 13
Lenders' focus will continue to remain on profitability and retention 14
Gone are the days of mass customer acquisition 14
Retention is the word 14
APPENDIX 15
Supplementary data 15
Definitions 19
Bank of England base rate 19
Fixed rate mortgage 20
Gross advances 20
Sub-prime 20
Remortgaging 20
Tracker mortgage 20
Variable mortgage 20
Methodology 20
Further reading 20
Ask the analyst 21
Datamonitor consulting 21
Disclaimer 21
[Inhaltsverzeichnis ausblenden]

Table 1: Two-year fixed rate products by top 10 mortgage lenders 10
Table 2: Likely movement in gross lending market share of top 10 mortgage lenders in 2008 13
Table 3: Top 10 mortgage lender by gross advances, 2006-07 15
Table 4: Top 10 UK mortgage lenders by gross advances, 2001-07 16
Table 5: Top 12 UK mortgage lenders by balances outstanding, 2001-07 17
Table 6: List of mortgage lenders in the UK market, May 2008 (Table 1 of 2) 18
Table 7: List of mortgage lenders in the UK market, May 2008 (Table 2 of 2) 19
Figure 1: Nationwide grew its mortgage business by a significant 37.9% over the 2006-07 period 3
Figure 2: HBOS has been losing mortgage market share over the years 4
Figure 3: All top 10 lenders increased their mortgage balances over 2007 but some lost market share 5
Figure 4: 48% of UK mortgage lenders are building societies 8
Figure 5: Average interest rate on fixed rate mortgages has continued to increase despite recent cuts in the base rate 9
[Tabellenverzeichnis ausblenden]