UK Mortgage Market Outlook: Q3 2007 (Market Focus)

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • Despite difficult times, gross mortgage lending in Q3 2007 was the highest on record
    • The UK mortgage market reached a record £98.7 billion in gross lending in Q3 2007
    • All product lines performed strongly in Q3 2007
    • Monthly analysis highlights that gross mortgage lending is slowing
      • Lower volume and value of secured loans approved in the last few months will ensure that the market continues to slow in Q4 2007
  • Gross mortgage lending will reach a new peak in 2007 but there are troubles ahead for 2008
    • A number of issues will adversely impact on gross lending in 2008
      • Falling house price trends are causing uncertainties
      • Funding issues continue to restrain lending
      • Consumer debt remains high
    • Under the Datamonitor View, the UK mortgage market will contract to £335.7 billion in 2008
    • Given the unpredictability of the UK mortgage market, Datamonitor has analyzed two additional alternative scenarios
      • The pessimistic scenario assumes a house price crash
      • The optimistic scenario adopts a bright view of the economy
  • A number of developments took place in the UK mortgage market in recent months
    • Some changes occurred in the number of lenders operating in the UK mortgage market
    • The FSA is to investigate mortgage lenders' handling of arrears and repossessions
• APPENDIX
  • Supplementary data
  • Definitions
    • Bank of England base rate
    • CAGR
    • Gross advances
    • LIBOR
    • Loan-to-value (LTV)
    • Second charge loan
    • Sub-prime
  • Methodology
  • Forecasting methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Forecasted gross advances in the UK residential market under the Datamonitor View, 2006-11f (£m)
    • Table 2: Forecasted gross advances in the UK residential market under a pessimistic view, 2006-11f (£m)
    • Table 3: Forecasted gross advances in the UK residential market under an optimistic view, 2006-11f (£m)
    • Table 4: UK gross mortgage lending in the third quarter, 2003-07 (£m)
    • Table 5: Value and volume of all secured loans approved in the UK
    • Table 6: UK gross mortgage lending by product line, Q1 2006-Q3 2007 (£m)
    • Table 7: Monthly house price change in the UK, Jan 06-Nov 07
    • Table 8: UK monthly gross mortgage lending by product line, Jan-Sep 2007 (£m)
    • Table 9: Forecast macroeconomic variables used in the Datamonitor View scenario, 2006-11
    • Table 10: Forecast macroeconomic variables used in the pessimistic scenario, 2006-11
    • Table 11: Forecast macroeconomic variables used in the optimistic scenario, 2006-11
  • List of Figures
    • Figure 1: Gross mortgage lending in Q3 2007 was the highest on record
    • Figure 2: Gross lending under all three product lines rose further in Q3 2007
    • Figure 3: Monthly gross mortgage lending is slowing
    • Figure 4: Both the value and volume of secured loans approved have been falling in the last few months in the UK
    • Figure 5: UK house prices fell in the last couple of months
    • Figure 6: Under the Datamonitor View, gross lending in the UK mortgage market will fall to £335.7 billion in 2008
    • Figure 7: Under a pessimistic scenario, gross advances in 2008 will fall by 13%
    • Figure 8: Under the optimistic scenario, gross lending in the UK mortgage market will reach £427.8 billion in 2011