In this Market Report, Key Note lays out an overview of the market for mortgages in the UK for the years 2011 to 2015, using industry data to assess the market in both volume and value terms. Key Note has also taken a look ahead to the 5 years to 2020, providing our view of the market’s direction going forward.
Between 2011 and 2015, gross mortgage lending in the UK increased by 56.9%, although growth in 2015 was far weaker than that seen in 2013 and 2014. However, despite a notable rise in the value of gross mortgage lending, the number of sterling mortgage approvals over the same period has increased by only 11.8%. Volume growth alone is not driving the significant increase in the value of gross mortgage lending — this is down to other, underlying factors, such as rising house prices and a return to higher loan-to-value (LTV) mortgages.
Rising house prices have had a major impact on the UK mortgage market, necessitating larger loans and larger deposits and also therefore acting to lock many people out of the housing market. The average UK home at the end of 2015 cost £288,000, according to the Office of National Statistics.
As a result of the difficulties people face in getting on the housing ladder, owner-occupancy as a percentage of all tenure statuses is falling and has been for the past 10 years, while private renting is on the rise. The UK now has one of the lowest rates of owner-occupancy in the EU-28.
Government intervention aimed at increasing the affordability of buying a home,...