Long-term Fixed Rate Mortgages have Seen a Rise in Popularity in the UK's Mortgage Market.DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c48842) has announced the addition of Pricing Models in the UK Mortgage Market: Time for Change? to their offering. Lenders have depended upon short-term pricing models over the last few years as they have concentrated on customer acquisition. However, such models have meant that lenders are continuing to suffer from diminishing di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. margins. As a result, lenders are taking a new interest in retention, which is being reflected in a change to pricing models. But to what extent will the market change? Scope of this title: * Discusses the key pricing models currently used by lenders in the market. * Gives insight into how the market is changing and which lenders are changing their pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. . * Provides an understanding of the challenges lenders face in regards to pricing. * Incorporates primary interviews from industry experts and secondary data from a wide range of sources. Highlights of this title: * The majority of lenders continue to use short-term pricing to acquire customers. Offering low headline rates has led to low margins. To recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. these costs, lenders have continued to raise arrangement and exit fees, which have brought about regulatory and media concern. * Lenders are turning to tracker products in order to support retention. Indeed, more lenders are moving away from SVRs by reverting re·vert intr.v. re·vert·ed, re·vert·ing, re·verts 1. To return to a former condition, practice, subject, or belief. 2. Law To return to the former owner or to the former owner's heirs. to a tracker rate after a products discount rate period ends. In fact, Alliance & Leicester now has a higher proportion of its lending in tracker related products than in SVR Noun 1. SVR - Russia's intelligence service responsible for foreign operations, intelligence-gathering and analysis, and the exchange of intelligence information; collaborates with other countries to oppose proliferation of weapons of mass destruction, terrorism and related products. * Long-term fixed rate mortgages have also seen a rise in popularity. Indeed, a number of lenders started offering such deals in 2006, including Woolwich, the Skipton Building Society The Skipton Building Society is the seventh largest mutual lending and savings organisation (known as a building society) in the United Kingdom.[1] The Society was established in 1853 in Skipton, North Yorkshire. The headquarters are still in Skipton. , First Direct, and Stroud stroud n. A coarse woolen cloth or blanket. [After Stroud, an urban district of southwest-central England.] & Swindon BS. Reasons to order your copy: * Identify the pricing strategies that are being successful, both in the short and long-term. * Gain an understanding of how the market is changing and what this means for lenders. * In-depth analysis of a number of pricing issues and how lenders are reacting. Topics Covered OUR VIEW CATALYST SUMMARY METHODOLOGY ANALYSIS Pricing has continued to become more competitive Net margins on lenders mortgage books has continued to decrease The majority of lenders continue to use short-term pricing to acquire customers Such a strategy has led to low margins To recoup the cost of low headline rates, lenders have continued to raise arrangement and exit fees However, the FSA FSA Financial Services Authority FSA Food Standards Agency (UK) FSA Farm Service Agency (USDA) FSA Financial Services Agency (Japan) has clamped down on rising mortgage exit fees APRs have also attracted criticism Critics argue that APRs are misleading, inconsistent and no longer relevant for the UK mortgagee mortgagee n. the person or business making a loan that is secured by the real property of the person (mortgagor) who owes him/her/it money. (See: mortgage, mortgagor) MORTGAGEE, estates, contracts. He to whom a mortgage is made. In fact, there have been suggestions for a replacement of the APR APR See: Annual Percentage Rate But APRs are likely to remain a part of the UK mortgage scene for some time to come However, changes to longer-term pricing strategies reflect an increasing focus on retention on the part of lenders A significant number of lenders are moving away from SVRs Tracker products in particular are gaining interest and momentum Tracker products are being used as a retention tool Lifetime trackers in particular gained popularity in 2006 An increasing number of lenders are offering long-term fixed rate mortgages Early and mid 2006 saw particular interest in such mortgages A number of lenders began offering long-term fixed rate deals Lenders offering the same rates to both new and existing customers are becoming more common Formerly, many lenders refused to offer the same rates to all customers However, Nationwide has somewhat changed its tune But an increasing number of lenders are moving towards this model Rewarding long-standing customers with discounts could be another way to improve retention Lenders are turning their focus on intermediary Intermediary See: Financial intermediary intermediary See financial intermediary. retention, with some offering procuration PROCURATION, civil law. The act by which one person gives power to another to act in his place, as he could do himself. A letter of attorney. 2. Procurations are either express or implied; an express procuration is one made by the express consent of the parties; fees for remortgages Halifaxs new retention strategy is likely to change the market Yet, lenders will never completely move away from short-term pricing unless the customer demands it There has been talk of SVRs disappearing Intermediaries have a role to play Ultimately, changes in the market depend on customer demand Yet, lenders could have a greater role in changing the market APPENDIX 1 Definitions Bank of England Bank of England, central bank and note-issuing institution of Great Britain. Popularly known as the Old Lady of Threadneedle Street, its main office stands on the street of that name in London. base rate Capped mortgage Fixed rate mortgage Flexible mortgage Tracker mortgage Variable mortgage Further reading European mortgage reports UK mortgage reports UK mortgage briefings Forthcoming mortgage briefings UK Mortgage Market Map 2006 Key Features For further information Relevant links Our custom research capabilities Ask the analyst List of Tables Table 1: Mortgage fees have increased substantially over the last five years, March 2001-March 2006 Table 2: In the short-term, ultimately, discounted variable rate mortgages are cheaper than lifetime tracker mortgages, September 2006 List of Figures Figure 1: The UK Mortgage Market Map 2006 covers a wide range of mortgage sectors Figure 2: Taxonomy taxonomy: see classification. taxonomy In biology, the classification of organisms into a hierarchy of groupings, from the general to the particular, that reflect evolutionary and usually morphological relationships: kingdom, phylum, class, order, of UK Mortgage Market Map 2006 Figure 3: Our core consulting capabilities For more information visit http://www.researchandmarkets.com/reports/c48842 Source: Datamonitor |
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