Product Type: Market Research Report
Published by: Datamonitor
Published: September 2006
Product Code: R313-16970Description Introduction
Large mortgage loans account for a tiny proportion of the UK mortgage market. Driven by factors such as City bonuses and the size of the High Net Worth population, this sector has witnessed a small revival at the start of 2006. This report provides an overall analysis of the large mortgage loan market in the UK, sizing and forecasting the sector, and looking at the competitive landscape.
Scope- Focuses on mortgage loans of £500,000 and over.
- Sizes the large mortgage loan market in terms of gross advances. Data relates to loans for house purchase and covers England and Wales.
- Looks at competitive and distribution dynamics.
- Provides five-year forecasts based on three scenarios.
Highlights
The sales of high value properties are directly dependent on the size and behavior of high net worth individuals, the evident typical customer type for such properties. Indeed, such individuals view properties as a sound investment and are always looking to upgrade to higher value properties to consolidate their assets.
While mainstream lenders have a strong presence in the large loan sector, they are facing competition from private banks. This is not surprising given the characteristics of the typical large loan customer. For instance, Coutts, the international private banking arm of The Royal Bank of Scotland Group, offers mortgages to its clients.
IFA firms are very active in the large loan sector, establishing key referral partnerships with solicitors, lawyers, accountancy practices and investment firms. According to an industry source, as an example, St James's Place has an informal arrangement with The Goldman Sachs Group to introduce mortgages to its employees.
Reasons to Purchase- Gives you a competitive edge by providing you with a thorough analysis of the UK large mortgage loan market.
- Learn how the competitive structure of the large mortgage loan market is changing.
- Draw on Datamonitor's five-year scenario-based forecasts to plan your future strategy with confidence.
Table of Contents - CHAPTER 1 INTRODUCTION
- Scope of this report
- Definition of large mortgage loans
- Who is the target reader?
- How to use this report
- CHAPTER 2 THE LARGE MORTGAGE LOAN MARKET IN CONTEXT
- Introduction
- The number of properties worth £0.5 million and over has increased substantially over the years
- 23,745 residential properties sold in 2005 were valued at £0.5 million and over
- Greater London accounted for the lion's share of properties sold worth £1.0 million and over
- Properties worth £0.5 million and over accounted for 2.6 per cent of the total stock of residential properties sold in 2005
- A number of factors have driven the sales of high value properties
- House prices have increased considerably in recent years
- The high net worth customer group is a major driver of sales of properties worth £0.5m and over
- City bonuses play an important role in the number of sales of high value properties
- Wealthy foreigners are increasingly investing in London properties
- Gross advances for house purchase in the large loan sector were worth an estimated £7.2 billion in 2005
- Methodology used in sizing the large mortgage loan market
- Datamonitor estimates that the large loan market has grown at a CAGR of 14.6 per cent over the last five years
- Remortgaging plays an important role in the large loan sector
- CHAPTER 3 THE COMPETITIVE DYNAMICS OF THE LARGE MORTGAGE LOAN MARKET
- Introduction
- A significant number of mortgage lenders offer large loans
- Although a large number of mortgage lenders operate in the large loan sector, maximum amount available for borrowing differs
- The majority of those lenders not operating in the large loan sector are small building societies
- Many lenders are generally unwilling to go above the £500,000 cut-off because of the higher risk involved should the customer default
- Moreover, all the top ten residential mortgage lenders operate in the large loan sector
- Some lenders' large loan offerings are more flexible than others
- Halifax and Abbey offer better interest rates on their large mortgage loans
- While mainstream lenders face competition from their high street rivals, they also have to compete with private banks
- A few major factors are crucial for successfully servicing the large loan sector
- HNW customers expect to receive a high quality of service
- Lenders need to have a strong presence among the IFA community
- Intermediaries are very active within the large loan sector
- CHAPTER 4 FORECASTING THE LARGE MORTGAGE LOAN MARKET
- Introduction
- Three forecasting scenarios are presented
- Under Datamonitor's View, the large loan market will reach £9.5 billion in gross advances in 2010
- Under the pessimistic scenario, gross advances in the large loan market will fall significantly before picking up in 2009
- Under the optimistic scenario, the large loan sector will account for 6.9 per cent of the total house purchase mortgage market in 2010
- CHAPTER 5 APPENDIX
- Supplementary data
- Data tables relating to Chapter 2: The Large Mortgage Loan Market in Context
- Definitions
- CAGR
- Gross advances
- Independent Financial Advisors (IFAs)
- Loan-to-value (LTV)
- Mortgage intermediary
- Research methodology
- Relevant readings
- UK Mortgage Market Map 2006
- Key Features
- For futher information
- Reports
- European mortgage reports
- UK mortgage reports
- UK mortgage briefings
- Future readings
- Datamonitor's custom research capabilities
- Retail Banking Team contact details
- List of Tables
- Table 1: Regional sales of properties valued at £1.0m and over, 2001-2005
- Table 2: Examples of lenders operating in the large loan sector and of lenders staying clear of this sector, June 2006
- Table 3: All major lenders in the mortgage market offer large loans, June 2006
- Table 4: A comparison of interest rates offered under large loans by top ten mortgage lenders, June 2006
- Table 5: Forecast gross advances for large loans under three scenarios, 2005-2010f
- Table 6: Volume of sales by price range (residential properties), 2001-2005
- Table 7: Proportion of properties worth £0.5 million out of total residential stock sold, 2001-2005
- Table 8: Standard house price by region, 2001-2005
- Table 9: Gross advances under house purchase for the large loan sector, 2001-2005
- List of Figures
- Figure 1: With the exception of 2005, the number of properties sold valued at £0.5 million and above has increased steadily over the past few years, 2001-2005
- Figure 2: The proportion of properties sold, valued at £0.5 million and over has risen steadily to reach 2.6 per cent in 2005, 2001-2005
- Figure 3: House price increases by region, 2001 and 2005
- Figure 4: There were 945,600 HNW individuals in the UK in 2005, 2001-2005
- Figure 5: Gross advances in the large mortgage loan market amounted to £7.2 billion in 2005, 2001-2005
- Figure 6: Coutts offers a range of mortgages to its HNW clients, June 2006
- Figure 7: The great majority of large loan business is generated via the intermediary channel, namely IFAs
- Figure 8: Under the Datamonitor's View, the large loan sector will reach £9.5 billion in gross advances for house purchase in 2010, 2006f-2010f
- Figure 9: Under the pessimistic scenario, gross advances for large loans will reach a low of £5.1 billion in 2008, 2006-2010f
- Figure 10: Under the optimistic scenario, gross advances for house purchase in the large loan sector will reach £12.1 billion in 2010, 2006f-2010f
- Figure 11: The UK Mortgage Market Map 2006 covers a wide range of mortgage sectors
- Figure 12: Taxonomy of UK Mortgage Market Map 2006
- Figure 13: Datamonitor's core consulting capabilities
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