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UK Subprime Mortgages 2008

  • Publication Date:November 2008
  • Publisher:Datamonitor
  • Product Type: Report
  • Pages:38

UK Subprime Mortgages 2008

Introduction

At the end of 2006, the future of the UK subprime mortgage market looked bright. Once a small niche with somewhat of a tainted reputation, this sector had expanded significantly over the last decade. However, things have changed dramatically since the advent of the credit crunch, with subprime mortgage lending shrinking dramatically and lenders shying away from the market.

Scope

  • Sizes the UK subprime mortgage market and presents scenariobased five year forecasts.
  • Sizes the nonstandard and subprime mortgage populations.
  • Analyzes the current state of the market and its future prospects.

Highlights

Extraordinary market conditions have meant that robust demandled factors such as an increase in the subprime population were unable to exert a positive pressure on subprime mortgage lending in 2007, as the downfall of the sector is primarily due to supplyled factors. In the last couple of years, an increasing number of specialist lenders were staying clear of the heavy end of subprime lending due to the increased riskiness of this sector in the rising consumer debt environment. The liquidity squeeze has accentuated this trend, with lenders also leaving the medium adverse sector. From being a maturing sector with fewer opportunities, the subprime mortgage market has reverted to being a small niche segment with attractive prospects.

Reasons to Purchase

  • Understand the changes occurring in this market and review your strategies accordingly.
  • Draw on Datamonitor's fiveyear scenariobased forecasts to plan your future strategy with confidence.
  • Overview
  • Catalyst
  • Summary
  • Analysis
    • The OnceBooming Uk SubPrime Mortgage Market Has Shrunk Significantly Due To The Credit Crunch
    • New Mortgage Lending In The Uk SubPrime Mortgage Sector Contracted By An Estimated 18% In 2007
    • SubPrime Mortgage Lending Will Amount To Just 30.7% Of Its 2007 Lending Levels In 2008
    • SupplyLed Rather Than DemandLed Factors Are Responsible For The Downfall Of SubPrime Mortgage Lending
    • SupplyDriven Issues Are Holding Back The Uk SubPrime Mortgage Market
    • A Sustained Increase In The SubPrime Mortgage Population In 2007 Had Little Impact On The Sector's Performance
    • There Are A Number Of Drivers That Affect The Size Of The SubPrime Mortgage Population
    • The Uk SubPrime Mortgage Population Has Been On The Upward Trend Since 2005
    • The Majority Of The Drivers Of The SubPrime Population Rose In 2007
    • The SubPrime Mortgage Population Is Expected To Continue To Expand In The Near Future
    • The Competitive Landscape Of The Uk SubPrime Mortgage Sector Has Changed Beyond Recognition
    • The Number Of Lenders Engaged In SubPrime Lending Has Plummeted In 2008
    • There Are Currently Fewer Than 10 Lenders Operating In The Uk SubPrime Mortgage Lending
    • Consequently, The Number Of SubPrime Mortgage Products Has Shrunk Significantly
    • The Medium And Heavy Adverse SubPrime Sectors Have Almost Disappeared
    • Margins In The SubPrime Mortgage Sector Have Become Competitive Again
    • A Gloomy Future Awaits The Uk SubPrime Mortgage Market
    • The Uk SubPrime Mortgage Market Will Return In Stages
    • Light Adverse Lending Will Remain The Focus In 2009
    • Under The Datamonitor View Scenario, SubPrime Mortgage Lending In The Uk Will Contract By A Further 10% In 2009
    • Given The Unpredictability Of The Uk SubPrime Mortgage Market, Datamonitor Has Analyzed Two Additional Alternative Scenarios
  • Appendix
    • Supplementary Data
    • Definitions
    • Aagr
    • Balances Outstanding
    • Bank Of England Base Rate
    • Cagr
    • Ccjs
    • Gross Advances
    • Libor
    • LoanToValue (Ltv)
    • NonStandard
    • SubPrime
    • Methodology
    • Sizing Methodology For The Uk NonStandard Population
    • Reasons For Credit Rejection
    • Elimination Of Double Counting
    • Datamonitor Uses Seven Steps To Size The Uk NonStandard Population
    • Bankruptcies Are Excluded Because Of Double Counting
    • Sizing Methodology For The SubPrime Mortgage Population
    • Elimination Of Double Counting
    • Five Steps Are Used To Size The Uk SubPrime Mortgage Population
    • Bankrupts Are Excluded Because Of Double Counting
    • Further Reading
    • Ask The Analyst
    • Datamonitor Consulting
    • Disclaimer
  • List Of Tables
    • Table 1: List Of SubPrime Mortgage Lenders, May 2007
    • Table 2: Forecasted Uk SubPrime Mortgage Gross Lending Under Datamonitor View Scenario, 200612f
    • Table 3: Forecasted Uk SubPrime Mortgage Gross Lending Under The Optimistic Scenario, 200612f
    • Table 4: Forecasted Uk SubPrime Mortgage Gross Lending Under The Pessimistic Scenario, 200612f
    • Table 5: Gross Advances For The Total Uk Mortgage Market And The Uk SubPrime Mortgage Market, 200307
    • Table 6: Uk NonStandard Population And Uk SubPrime Mortgage Population, 200307
    • Table 7: Number Of Ccjs On Record And Registered In England And Wales, 199807
    • Table 8: Property Repossession And Mortgage Arrears Data, 200307
    • Table 9: Individual Insolvencies In England And Wales, 199807
    • Table 10: Number Of CreditImpaired Mortgage Products In The Uk, February 2007November 2008
  • List Of Figures
    • Figure 1: Gross Lending For SubPrime Mortgages Dipped By 18% In 2007
    • Figure 2: Gross Lending In The Uk SubPrime Mortgage Market Is Expected To Amount To Only 6.2 Billion In 2008
    • Figure 3: The Uk SubPrime Mortgage Population Rose Slightly In 2007
    • Figure 4: The Number Of Ccjs On Record Rose Further In 2007, Although The Number Of Ccjs Registered Fell Slightly
    • Figure 5: After Dropping In 2006, The Number Of Mortgages Which Are More Than Three Months In Arrears Rose In 2007
    • Figure 6: Bankruptcy Orders Increased By 2.4% To Reach 64,480 In 2007
    • Figure 7: Only A Few Lenders Are Left Standing In The Uk SubPrime Mortgage Market, November 2008
    • Figure 8: The Number Of SubPrime Mortgage Products In The Uk Shrunk From A Peak Of 9,531 In July 2007 To 614 In November 2008
    • Figure 9: Gross Lending In The Uk SubPrime Mortgage Market Will Fall By 69% In 2008 And By A Further 10% In 2009
    • Figure 10: Under The Optimistic Scenario, Gross Lending In The Uk SubPrime Mortgage Market Will Amount To 7.8 Billion In 2008
    • Figure 11: Under The Pessimistic Scenario, Gross Lending In The Uk SubPrime Mortgage Market In 2008 Will Shrink To A Quarter Of Its 2007 Levels
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