UK Mortgage Market 2018: Forecasts and Future Opportunities

The mortgage market has recovered well since the financial crisis, often producing double-digit growth each year. However, rising economic uncertainties will dampen the prospects for future growth over the coming years. During the forecast period (2018-22), gross advances are expected to record a compound annual growth rate (CAGR) of 4.2%, reaching £338bn by the end of the forecast period versus a historic five-year CAGR of 7.6% from 2013 to 2017.

On the supply side, an increased supply of new homes, stamp duty relief for first-time buyers, and the extension of the Help to Buy equity loan scheme will improve matters for first-time buyers. More withdrawals in the buy-to-let sector by landlords are expected over the next two years, increasing the supply of properties available to both existing homeowners and first-time buyers.

Political uncertainty arising from the Brexit negotiations has weighed on economic growth, and is likely to continue to do so over the forecast period. But high levels of employment, rising wages, and slower private rental growth – combined with significant government intervention in the housing market – will ensure moderate growth over the forecast period.

This report offers five-year gross lending forecasts for residential and niche mortgages up to 2022, along with a detailed examination of the various supply-side factors that will determine the market outlook. It offers insight into –

– The key macroeconomic, regulatory, and other factors that will drive the supply of mortgages over the next five years.

– The outlook for niche sectors, including buy-to-let, equity release, shared ownership, shared equity, Right to Buy, Sharia-compliant, and self-build.


– The Right to Buy sector will be supported by the scheme’s extension to housing association tenants and the government’s lifting of the Housing Revenue Account cap, enabling local authorities to increase borrowing to invest in new housing stock.

– Buy-to-let lenders are adapting to margin compression by including non-rental income in affordability assessments. As mortgage interest tax relief is removed, demand for top-slicing products will increase.

– The number of equity release products is growing rapidly to meet consumer demand. Prospects for further growth are strong, with several years’ worth of property price rises leaving borrowers with plenty of capital value to withdraw.

– The removal of restrictive criteria and increased consumer awareness, combined with substantial government funding, will see the shared ownership sector grow significantly over the forecast period.

Reasons to buy

– Develop more targeted strategies through analysis of key mortgage market developments.

– Inform your future plans with our five-year forecast of gross advances for niche product lines.

– Analyze trends with details of historic gross advances across a range of specialist mortgage sectors and product types.

Companies mentioned

Al Rayan Bank

Secure Trust Bank

Vida Homeloans and Masthaven

Virgin Money

Table of Contents

Table of Contents


1.1. Market summary 2

1.2. Key findings 2


2.1. Supply-side factors will increase the pool of funds available for lending 7

2.1.1. Regulatory changes have dampened the appeal of the buy-to-let sector 7

2.1.2. First-time buyer numbers continue to grow as a result of government support 8


3.1. Government intervention has reigned in buy-to-let lending 11

3.2. Shared equity activity will continue to grow, but at a slower rate 12

3.3. Shared ownership has been boosted by regulatory changes 13

3.4. Right to Buy will grow moderately over the next few years 14

3.5. Equity release will see double-digit growth throughout the forecast period 15

3.6. Self-build lending is unlikely to meet demand 16

3.7. Market volatility as a result of the UK’s withdrawal from the EU could present opportunities for the secured lending market 18

3.8. Professional and graduate mortgages will continue to flatline 19

3.9. The appeal of Islamic home finance is broadening 20


4.1. Offset mortgage lending will decline 22

4.2. Sterling depreciation as a result of Brexit will buttress the large-value mortgage lending sector 23

4.3. Near-prime lending is expected to remain strong 24


5.1. Abbreviations and acronyms 26

5.2. Definitions 26

5.2.1. BoE base rate 26

5.2.2. Gross advances 26

5.2.3. Remortgaging 26

5.3. Methodology 26

5.4. Secondary sources 27

5.5. Further reading 28

List of Figures

List of Figures

Figure 1: Gross mortgage lending reached £257bn in 2017 6

Figure 2: Buy-to-let regulations have resulted in increased supply, creating opportunities for existing homeowners 8

Figure 3: Help to Buy has been instrumental in increasing the number of first-time buyers 9

Figure 4: Average earnings growth has started to outpace rental growth, providing positive economic conditions for first-time buyers 10

Figure 5: Buy-to-let gross advances will record slow growth over the forecast period 12

Figure 6: Shared equity lending will grow at an average of 14% over the forecast period 13

Figure 7: Shared ownership growth will remain in double digits over the forecast period 14

Figure 8: Right to Buy lending will rise at a stable pace over the forecast period 15

Figure 9: Growth in availability and demand will see equity release gross advances reach £7.6bn by 2022 16

Figure 10: Self-build lending growth will remain in the single digits over the forecast period 17

Figure 11: Secured lending will remain strong despite Mortgage Conduct of Business regulations 19

Figure 12: The lack of providers in the professional and graduate mortgage market will hold back growth 20

Figure 13: Rising awareness of Islamic finance will lead to growth in mortgage lending 21

Figure 14: Waning demand will result in the contraction of the offset mortgage sector 23

Figure 15: Large-value mortgage demand will be driven by wealthy foreign buyers 24

Figure 16: Near-prime lending will see impressive growth over the next few years 25


Discounts available for multiple report purchases.
+44 20 7947 2745

Join our mailing list

Saved reports