UK Mortgage Market Outlook: Q1 2007 (Market Focus)

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • The UK mortgage market kicked off strongly in 2007 with £83.9 billion in gross lending in Q1
    • Despite successive increases in the base rate, housing activity has remained strong in Q1 2007
    • Highest Q1 lending on record in 2007
      • All product lines benefited from a strong mortgage market in Q1 2007
  • Sound macroeconomic indicators have continued to drive mortgage lending in Q1 2007
    • A healthy macroeconomic environment has contributed to strong mortgage lending in Q1 2007
      • GDP growth has remained healthy in Q1 2007
    • House prices rose further in Q1 2007
      • Unemployment has remained low in Q1 2007
  • Despite strong lending so far, the UK mortgage market is likely to cool down over 2007
    • The base rate was increased further in order to curb Inflationary pressures
      • Higher costs of borrowing are likely to put more pressure on indebted households
      • Higher interest rates are likely to lead to a lower housing activity level over the remainder of 2007
    • Datamonitor' s previous forecasts are still pertinent
      • Under the Datamonitor View, the UK mortgage market will continue to grow but at a slow rate
      • Given the unpredictability of the UK mortgage market, Datamonitor has analyzed two additional alternative scenarios
  • Latest regulatory update and production innovation in the UK mortgage market
    • Regulatory update: HIPs implementation date postponed
      • Other mortgage-related regulatory updates at a glance
    • A couple of innovative mortgage products were launched in April 2007
      • GMAC-RFC launched its MERC mortgage product with a redemption swap feature
      • John Charcol launched a ' rent-a-room' mortgage in partnership with West Bromwich Building Society
• APPENDIX
  • Definitions
    • Bank of England base rate
    • Buy-to-let mortgage
    • CAGR
    • CCJs
    • Gross advances
  • Methodology
  • Forecasting methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Forecast macroeconomic variables used in the Datamonitor View scenario, 2005-2011f
    • Table 2: Forecasted gross advances in the UK residential market by product lines under Datamonitor view, 2006-2011f
    • Table 3: Forecast macroeconomic variables used in the pessimistic scenario, 2005-2011f
    • Table 4: Forecasted gross advances in the UK residential market by product lines under a pessimistic view, 2006-2011f
    • Table 5: Forecasted gross advances in the UK residential market by product lines under an optimistic view, 2006-2011f
    • Table 6: Forecast macroeconomic variables used in the optimistic scenario, 2005-2011f
  • List of Figures
    • Figure 1: Housing activity in Q1 2007 was stronger than in Q1 2006, March 2005 to March 2007
    • Figure 2: Gross lending in Q1 2007 delivered a record performance, Q1 2002 to Q1 2007
    • Figure 3: All product lines have benefited from the strong mortgage market in Q1 2007, Q1 2003 to Q1 2007
    • Figure 4: The average UK house price increased further in Q1 2007, Q1 2002 to Q1 2007
    • Figure 5: Under Datamonitor View, gross advances in the UK mortgage market will reach £357.2 billion in 2007, 2006 to 2011f
    • Figure 6: Under the pessimistic scenario, gross lending in the UK mortgage market will reach a low of £282.8 billion in 2008 before picking up again, 2006 to 2011f
    • Figure 7: Under the optimistic scenario, gross advances in the UK mortgage market will reach £437.6 billion in 2011, 2006 to 2011f