Currency Mortgages in the UK 2006

Publication Date	September 2006
Publisher	Datamonitor
Product Type	Report
Pages	38
ISBN Number	not applicable
Product Code	DAT04252

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Summary

Introduction

Currency mortgages or multi-currency mortgages represent a very small share of the mortgage market. Offered by a number of private banks, they are targeted towards high net worth individuals. our Currency Mortgages in the UK 2006 explains the mechanism of the product, provides market sizing and forecasting data over the next five years and looks at the competitive landscape.

Scope

Focuses on multi-currency loans on residential properties based in the UK available to both UK residents and foreigners.
Focuses on the managed currency mortgage market.
Sizes the managed currency mortgage market.
Provides five-year forecasts.

Highlights

While the mortgage loan itself is governed by the Financial Services Authority (FSA), foreign currency transactions involving mortgages are not governed by the FSA, implying that there is no compensation scheme in place should things go bad.

Unsurprisingly, currency loan customers are made up primarily of high net worth (HNW) individuals, who are well placed to understand the mechanism of such mortgages and have the necessary financial resources to take the risk of seeing their mortgage increase significantly.

Primary and secondary research conducted for the course of this report revealed that lenders operating in this sector do not actively market their products.

Reasons to Purchase

Gives you a competitive edge by providing you with a thorough analysis of the currency mortgage market.
Learn who are the major players in this sector.
Draw on our five-year scenario-based forecasts to plan your future strategy with confidence.

Content

Chapter 1 Introduction
- Scope of this report
- Who is the target reader?
- How to use this report
Chapter 2 Currency Mortgages In Context
- Introduction
- Currency mortgages explained
- There are basically two types of foreign currency mortgage
- The need to mitigate risks saw the appearance of multi-currency loans
- The role of the currency mortgage manager is to reduce the debt
- There are various costs involved for the managed currency mortgage customer
- Multi-currency loans are risky but offer a number of advantages to those customers willing to take the risks
- Despite being risky, currency loans offer various advantages
- Currency mortgages are only suited for a niche customer group
- Customers of currency mortgages are high net worth individuals
- Unsurprisingly, the size of the multi-currency mortgage market is tiny
- Currency mortgage loans under management amounted to an estimated 0.5 billion as at the end of December 2005
- The HNW population and sales of high value properties are drivers of this niche sector
- 23,745 properties worth 0.5 million and over were sold in England and Wales in 2005
- There were 945,600 high net worth individuals in 2005
- Datamonitor expects that the size of the multi-currency mortgage market will remain negligible over the next five years
- The managed multi-currency mortgage market will reach 2.0 billion in 2010
Chapter 3 The Competitive Landscape Of The Currency Mortgage Market
- Introduction
- Lenders operating in the currency mortgage sector are private banks
- The number of private banks offering currency mortgages is relatively small
- Many major private banks in the UK do not operate in the currency mortgage market
- HSBC and Singer & Friedlander Ltd are recognized as the leading players
- Together HSBC and Singer & Friedlander held 75 per cent of mortgage funds managed by the ECU
- Players do not generally market their products
- It is difficult to compare between competitors' products
- IFAs play a significant role in the distribution of multi-currency mortgages
- A significant proportion of multi-currency mortgages are generated via the IFA channel
Chapter 4 Appendix
- Supplementary data
- Data tables relating to Chapter 2: Currency Mortgages in Context
- Definitions
- CAGR
- Independent Financial Advisors (IFAs)
- Loan-to-value (LTV)
- Mortgage intermediary
- Multi-currency mortgage
- Research methodology
- Secondary research
- Relevant readings
- UK Mortgage Market Map 2006
- Key Features
- For futher information
- Reports
- European mortgage reports
- UK mortgage reports
- UK mortgage briefings
- Future readings
- Datamonitor's custom research capabilities
- Retail Banking Team contact details
List of Tables
- Table 1: Moneyfacts' list of lenders offering foreign currency loans, June 2006
- Table 2: Examples of lenders operating in the UK multi-currency mortgage market, August 2006
- Table 3: Volume of sales by price range (residential properties), 2001-2005
- Table 4: Non-cumulative gross interest saving made by the ECU Group by switching mortgages between currencies where cost of servicing is lower, 1996-2005
- Table 5: Forecasted size of the managed multi-currency mortgage market, 2005-2010f
List of Figures
- Figure 1: The aim of the a multicurrency mortgage is to reduce the debt by switching to weakening currencies compared to sterling
- Figure 2: The ECU Group has been able to make interest savings by switching mortgages between currencies where cost of servicing is lower, 1996-2005
- Figure 3: With the exception of 2005, the number of properties sold valued at 0.5 million and above has increased steadily over the past few years, 2001-2005
- Figure 4: There were 945,600 HNW individuals in the UK in 2005, 2001-2005
- Figure 5: Datamonitor forecasts that the size of the managed multi-currency mortgage market will exceed 2.0 billion in 2010, 2005-2010f
- Figure 6: HSBC Private Bank, Singer & Friedlander and Dresdner Kleinwort Benson together hold 90 per cent of the mortgage funds managed by the ECU Group, July 2006
- Figure 7: Singer & Friedlander's webpage on currency mortgages, August 2006
- Figure 8: 80 per cent of multi-currency mortgages come via the IFA channel
- Figure 9: The UK Mortgage Market Map 2006 covers a wide range of mortgage sectors
- Figure 10: Taxonomy of UK Mortgage Market Map 2006
- Figure 11: Datamonitor's core consulting capabilities