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Mortgage Processing Outsourcing
Feasibility for the UK Market

  • Publication Date:December 2006
  • Publisher:Datamonitor
  • Product Type: Report
  • Pages:19

Mortgage Processing Outsourcing Feasibility for the UK Market

Introduction

Mortgage processing outsourcing (MPO) can be a valuable asset to UK lenders as more look to cut costs in an ever more competitive market. Yet MPO has not yet been taken up by the majority of mainstream lenders. What are the advantages and disadvantages MPO offers to lenders? To what size will the market grow?

Scope

  • Sizes the UK mortgage processing outsourcing market and forecasts its growth to 2008.
  • Provides insight into how the UK MPO market is changing.
  • Gives insight into the benefits and drawbacks of MPO for lenders.
  • Incorporates primary interviews from industry experts and secondary data from a wide range of sources.

Highlights

While starting from a small base, the UK MPO market has continued to grow. In 2006, Datamonitor estimates that it will have grown at an average annual rate of 8.4 per cent since 2002, showing its potential.

MPO firms need to regain the trust of mainstream lenders. Indeed, the market was given a heavy blow by Barclays Bank's pull-out with Countrywide as well as the earlier break-up between Alltel and Bradford & Bingley.

An increasing number of investment banks and smaller lenders are using the services of MPO firms in the sub-prime mortgage market. These firms provide a ready-made infrastructure and a variable cost base for lenders. Recent deals in the sub-prime market include db mortgages with Vertex and Mortgages plc with Home Loan Management (HML).

Reasons to Purchase

  • In-depth analysis of where the MPO market is headed and the extent to which UK lenders will be involved.
  • Evaluate any opportunities or disadvantages that MPO poses to your business.
  • Understand how the market is changing through our forecast of the UK MPO market to 2008.
  • Catalyst
  • Summary
  • Methodology
    • AnaLYSIS
    • Mortgage processing outsourcing is a growing industry in the UK
    • Mortgage processing outsourcing involves a variety of functions
    • There are a number of well-known and established MPO firms in the UK
    • There are a number of advantages that lenders can garner by outsourcing one or more of these processes
    • In 2006, mortgage processing outsourcing amounted to $218.8 million
    • Such growth is unsurprising as falling margins in the UK mortgage market has meant that MPO can serve as a key competitive differentiator for lenders
    • Yet, mortgage processing outsourcing remains a niche sector in the UK
    • A few lenders are active in this sector, however, it has not taken off substantially in the mainstream
    • Many more have stayed away because of the disadvantages associated with MPO
    • As a result, most MPO is done at the back-end of the business
    • Moreover, the FSA is going to investigate overseas outsourcing, which does not help MPOs reputation
    • But could this change in the future?
    • A competitive MPO market is developing in the UK
    • In particular, investment banks and those in the sub-prime sector have been increasingly using outsourcing
    • Will those in the sub-prime sector bring their culture to the UK mainstream market?
    • While future expansion is likely, the sector will remain a niche market in the short-term
    • Some areas of MPO will see more custom than others
  • Appendix
    • Definitions
    • Mortgage processing outsourcing
  • 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
    • Datamonitor's custom research capabilities
    • Ask the analyst
  • List of Tables
    • Table 1: Different areas of MPO will see different rates of growth over the next few years, 2006
  • List of Figures
    • Figure 1: There are five different stages of mortgage processing that can be outsourced, 2006
    • Figure 2: The UK mortgage processing outsourcing market has grown consistently over the last five years, 2002-2006
    • Figure 3: Mortgage processing will continue to grow gradually, 2006-2008f
    • Figure 4: The UK Mortgage Market Map 2006 covers a wide range of mortgage sectors
    • Figure 5: Taxonomy of UK Mortgage Market Map 2006
    • Figure 6: Datamonitor's core consulting capabilities
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