United Kingdom (UK) Mortgage Market 2020 – Review, Forecasts, and Future Opportunities

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The UK mortgage market was characterized by an initial slowdown in mortgage activity in 2020, followed by a significant rise, with overall mortgage balances outstanding 3.1% higher in January 2021 than at the same point in 2020. This can largely be attributed to changes in stamp duty, creating an incentive for consumers to buy property. Residential mortgage lending growth is set to continue at a steady pace, reaching £1,730bn in 2025 – up from £1,499bn in 2020 at a compound annual growth rate of 2.91%. Meanwhile, the UK economy shrank by 10.9% in 2020, one of the worst falls for a comparable developed nation. And while real wage growth and unemployment stayed benign at 3.8% and 5% respectively, inflation is likely to rise sharply in the short term as the velocity of money increases. Meanwhile, the government has proposed several reforms, trying to tackle the UK’s housing shortage and dysfunctional housebuilding market by increasing housing affordability. In the long term these reforms are likely to be successful, which should lead to more consumers requiring a mortgage and therefore increasing overall mortgage growth.

This report provides insight into the UK mortgage market, including overall and forecast mortgage balances to 2025, a look at the UK macroeconomic scene during the course of 2020 and the likely short- and long-term outcomes, and the latest market share data for the top UK mortgage providers going back to 2010. It also provides analysis of recent regulatory changes around shared equity mortgages and how changes to planning policy are likely to affect the overall UK mortgage market. The report also explores digital mortgage innovation in the UK, as well as other mortgage and COVID-19-related innovations.


– While overall mortgage activity has declined, resilience has been seen in the niche mortgage sector, with niche mortgages now accounting for 27% of the market.

– Housing affordability has declined in all regions of England and Wales over the last two decades, with the largest increases in unaffordability driven by but not exclusive to London and the South East.

– Growth in net advances in the UK has been very low since the global financial crisis, creating a rather static market. This has led to incumbent mortgage players struggling to gain market share without accepting lower net interest margins.

Reasons to Buy

– Gain insight at both the micro and macro level for the UK mortgage market.

– Learn about threats to incumbent and newer mortgage providers, as well as potential opportunities post-COVID around the increasingly digital mortgage process.

– Compare the performance and strategic direction of your firm against competitors.

Lloyd’s Banking Group
Virgin Money
Clydesdale Bank
Tesco Bank
Sainsbury’s Bank
Metro Bank
Yorkshire Building Society
Coventry Building Society
Leeds Building Society
Skipton Building Society
Bank of Scotland
86 400
Aldermore Bank
Mortgage Broker Tools
Mortgage Brain
Mortgage Engine
Fluent Mortgages
Open Future World
United Trust Bank

Table of Contents

Table of Contents

1. Executive Summary

1.1 Market overview

1.2 Key findings

1.3 Critical success factors

2. Market Environment

2.1 Despite initial predictions of a collapse, the mortgage market continued to rise in 2020

2.2 Mortgage lending growth has yet to recover to pre-2007 levels

3. Macroeconomic Environment

3.1 Real GDP is not expected to recover until 2026

4. Competitive Environment

4.1 Smaller players have steadily taken market share from Lloyds over the last decade

4.2 COVID-19 has forced lenders to look again at their mortgage products

4.3 Unlike other UK challengers, Tandem has focused on developing a suite of deposit and mortgage products

5. Regulatory Environment

5.1 Regulation is shifting towards allowing more building

5.2 The government is also promoting shared ownership

6. Innovation

6.1 The COVID-19 pandemic has accelerated the mortgage digitization trend

6.2 The latest mortgage innovations in the UK market

7. Appendix

7.1 Abbreviations and acronyms

7.2 Secondary sources

7.3 Further reading

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List of Figures

Figure 1: Mortgage lending continued to rise during the course of 2020, and this trend is expected to persist to 2025

Figure 2: While gross advances slowly increased over the decade pre-COVID, net advances remained static

Figure 3: Affordability has decreased across the country

Figure 4: While GDP has fallen significantly, unemployment has been surprisingly low

Figure 5: UK consumers have seen just as many periods of real wage losses as gains in the last 10 years

Figure 6: Lloyds has lost significant market share to smaller players over the last decade

Figure 7: The NIMs of major incumbents remain low and have mostly fallen in recent years

Figure 8: Digital mortgage broker Trussle allows customers to benchmark how a bank performs on soft factors, such as time to apply and number of official complaints

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