DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Gross lending in Q3 2009 was well down on the same period in 2008, itself a quiet year 2
UK gross lending fell by 36% in Q3 2009 to £39 billion, compared to Q3 2008 2
Gross lending for the whole of 2009 is forecast to be 61% lower than the total for 2007 3
Monthly gross advances have remained at a steady level for the duration of 2009 3
House purchase activity has started to pick up in the last few months 4
The market for remortgaging continues to be affected by the low base rate 4
House prices have staged a recovery in the second half of 2009 5
Price rises have been mainly driven by the lack of supply of properties and lower than expected unemployment 6
Arrears and repossessions continue to rise more slowly than anticipated 7
The supply of mortgage credit remains under pressure, but is starting to ease 7
Trading in mortgage-backed securities has restarted 8
The PBR points the way to widespread spending cuts in 2011 and beyond 9
The stamp duty holiday will not be extended into 2010 9
Gross lending is likely to stage a steady rather than spectacular recovery over the next few years 9
The wider economic situation provides both hope and concern for the mortgage market in 2010 and beyond 9
Datamonitor predicts that gross lending in the UK will rise to £235 billion in 2013 10
Datamonitor has produced two alternative forecasts in recognition of the contradictory factors at work in the market 12
The optimistic scenario sees the economy and consumer confidence recovering more quickly than expected 12
The pessimistic scenario assumes that projected spending cuts and tax rises will hinder recovery 13
A number of external developments will have direct consequences for the mortgage market 15
The Financial Services Authority sets out its Mortgage Market Review 15
The last lenders offering self-certification mortgages have pulled out of the market 15
APPENDIX 17
Supplementary data 17
Definitions 21
Bank of England base rate 21
CAGR 21
Gross advances 21
Remortgaging 21
RMBS 22
Self-certification mortgage 22
Methodology 22
Forecasting methodology 22
Further reading 23
Ask the analyst 24
Datamonitor consulting 24
Disclaimer 24
List of Tables
Table 1: Forecast gross advances under the Datamonitor view, 2009-2013 11
Table 2: Forecast gross advances under the optimistic view, 2009-2013 13
Table 3: Forecast gross advances under the pessimistic view, 2009-2013 14
Table 4: UK gross mortgage lending in third quarter, 2005-2009 17
Table 5: UK annual gross mortgage approvals, 2003-2009 17
Table 6: UK gross monthly approvals, 2006-2009 18
Table 7: Monthly and annual changes in UK house prices, 2007-2009 19
Table 8: UK gross approvals by type, 2007-2009 20
Table 9: Quarterly changes in secured credit availability and credit scoring criteria, 2007-2009 21
List of Figures
Figure 1: Gross lending in Q3 2009 was very subdued compared to the same period in recent years 2
Figure 2: Annual gross lending figures highlight the scale of the decline since 2007 3
Figure 3: Monthly gross advances bottomed out in November 2008 and has held steady ever since 4
Figure 4: Approvals for remortgages have stagnated in 2009, but have partially recovered for purchases 5
Figure 5: House prices have been rising since the spring 6
Figure 6: Mortgage credit availability has continued to tighten 8
Figure 7: In the view of Datamonitor, gross lending will rise to £247 billion in 2013 11
Figure 8: In the optimistic scenario, gross lending will reach £307 billion in 2013 12
Figure 9: The pessimistic forecast sees gross lending stagnating in 2010 and 2011 14
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