Introduction

While UK national mortgage markets are similar, there are important differences among them. Such differences are crucial for lenders to assess their own performances against as well as take advantages of future opportunities. Indeed, the housing market, the extent to which the lack of affordability is an issue, and competition among lenders all differ across national mortgage markets.

Scope

Discusses the key ways in which UK national markets differ, in terms of competition, the housing market, and government initiatives, among others. Provides forecasts for each constituent country's housing market up to 2011. Identifies the differences in competition between lenders in each national market.

Highlights

The housing market performed far more strongly than anticipated in 2006. Yet each national market performed differently; Northern Irish house prices continue to catch up with the UK mainland and Scottish house prices continue to perform strongly, while England and Wales are seeing comparatively slower growth. The lack of affordability has become one of the major overarching issues in the UK mortgage market. Northern Ireland has now taken over England as the country with the least affordable house prices, yet house prices have recently become increasingly difficult to afford in Wales, while affordability remains somewhat better in Scotland. There are fewer active lenders in Northern Ireland compared to the other national markets. This can partly be attributed to its small size, the different conveyancing processes, and possibly the lack of familiarity with them amongst lenders. However, the mortgage market in Northern Ireland is becoming increasingly more competitive.

Reasons to Purchase

Gain a thorough understanding of the dynamics affecting each constituent country. Understand where the opportunities lie in regards to each national market. Incorporates primary interviews from industry experts and secondary data from a wide range of sources.

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
While national UK mortgage markets are similar, they do bear noticeable and important differences 2
House price inflation in all four countries has continued to rise above expectations, but some more than others 2
UK house price growth was unexpectedly strong in 2006 2
Northern Ireland's house prices have seen the greatest growth of all over the last few years 3
House prices in Scotland are also continuing to rise at a fast rate 4
In the meantime, house prices in England and Wales have now slowed 4
As a result, lack of affordability has become an overarching issue in the majority of the constituent countries 4
A lack of affordability has become a problem in most national markets 4
Consequently, first time buyers in particular have been affected across all markets 5
First time buyers in Northern Ireland are having an increasingly difficult time 6
Those in England, Wales and Scotland continue to struggle 6
The lack of first time buyers is a drawback for the UK housing market, the economy and lenders 7
Moreover, the lack of affordability will remain a long-term issue as Datamonitor forecasts all national house prices to continue upwards over the next five years 7
Yet government initiatives to combat the lack of affordability do differ on a national basis 9
England and Wales have a substantial number of initiatives on offer 10
Indeed, shared equity mortgages are an innovative and big step ahead for FTBs and lenders 10
Scotland also has a number of government initiatives 10
Northern Ireland does not have as many initiatives on offer 11
In the meantime, competition among lenders is generally quite similar, but there are small differences across countries 12
Those lenders that dominate the UK mortgage market also dominate the English and Welsh markets 12
In Scotland, Scottish lenders have a greater presence than the rest of the UK 13
Northern Ireland still has the fewest active lenders in the UK 13
In the future, competition in national markets could be skewed further by the integration of European mortgage markets 13
APPENDIX 15
Supplementary data 15
Definitions 18
Balances outstanding 18
Buy-to-let 18
CAGR 18
Non-standard 18
Right to Buy 19
Shared ownership 19
Methodology 19
Forecasting methodology 19
Further reading 20
European mortgage reports 20
UK mortgage reports 21
UK mortgage briefings 21
Forthcoming mortgage reports 22
Forthcoming mortgage briefings 22
UK Mortgage Market Map 2006 22
Key Features 24
For further information 25
Relevant links 25
Ask the analyst 26
Datamonitor consulting 26
Disclaimer 26
List of Tables
Table 1: Tenure of dwellings, by percentage of stock, 2004 and 2005 11
Table 2: Top five mortgage lenders by balances outstanding in the UK, 2005 12
Table 3: Indexed house prices by UK national market, Q4 2002-Q4 2006 15
Table 4: House price to income ratio by UK national market, Q3 1997-Q2 2004 (Table 1 of 2) 16
Table 5: House price to income ratio by UK national market, Q3 2004-Q3 2006 (Table 2 of 2) 17
Table 6: Percentage of mortgages to first time buyers, 1996-2005 17
Table 7: Annual house price growth forecasts for Wales, Scotland, and Northern Ireland, 2006-2011f 18
Table 8: Annual house price growth forecasts for England, 2006-2011f 18
Table 9: Sources of information for Datamonitor's UK national house price forecasts 20
List of Figures
Figure 1: Northern Ireland and Scotland have continued to see particularly strong growth, Q4 2002 - Q4 2006 3
Figure 2: House prices have become less affordable, most recently in Northern Ireland and Wales, Q3 1997 - Q3 2006 5
Figure 3: First time buyers in Northern Ireland in particular are finding it increasingly difficult to purchase a property, 1996-2005 6
Figure 4: House price growth in Wales, Scotland and Northern Ireland over the next five years will not particularly alleviate the lack of affordability, 2006-2011f 8
Figure 5: House prices in England over the next five years will not lessen the lack of affordability by much at all, 2006-2011f 9
Figure 6: The UK Mortgage Market Map 2006 covers a wide range of mortgage sectors 23
Figure 7: Taxonomy of UK Mortgage Market Map 2006 24