From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

Published: 30 June 2017

Before the recession, there were about 1.6 million home sales a year in the UK, which plummeted to 860,000 in 2009 but has since recovered to around 1.2 million. New research (full report can be downloaded from the bottom of the page) suggests that the shortfall is largely the result of "missing movers" - mortgaged home-owners not moving up the housing ladder.

The CML commissioned researchers Neal Hudson and Brian Green to explore the phenomenon. They suggest that "missing movers" account for about 320,000 of the annual housing transaction shortfall. They point to a number of reasons for the decline, including the fact that there are now fewer mortgaged owners, and they tend to be older and so naturally less likely to move. However, there are still around 140,000 missing moves that can be attributed to a decline in the rates of moving among mortgaged home-owners.

Three factors determine the moving rate among this groups - their desire to move, sufficient funds, and the availability of a home they want to buy. Of these three factors, the research suggests that the availability of sufficient funds - specifically, sufficient equity - is the dominant factor holding back the mortgaged mover rate.

The researchers observe that, in many ways, it is not the present but the past that is extraordinary. For five decades the market underwent changes that provided an enormous boost to the ability of people to buy and to own their homes. But expecting a return to those conditions is unrealistic, they suggest. They conclude:

The challenges of the future must be tackled on the basis of the context in which we find ourselves today. That is one of low interest rates, relatively low inflation, high and rising house prices relative to the incomes of prospective home-owners, and an ageing population.

From our analysis, this combination is unlikely to unlock broad-based equity building or provide much scope for more relaxed lending.

Perhaps fresh, novel policies will emerge that facilitate more moving in the current much-changed economic environment. However, in their absence we should expect the foreseeable future movement among mortgaged home-owners to remain constrained.

 

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 97% of all residential mortgage lending in the UK. There are 11.1 million mortgages in the UK, with loans worth over £1.3 trillion.

2. From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance. It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation will take on activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.

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