The 10 largest mortgage lenders in the United Kingdom accounted for approximately 81 percent of the total market, with the top three alone accounting for 41 percent in 2023. Lloyds Banking Group had the largest market share of gross mortgage lending, with nearly 36.8 billion British pounds in lending in 2023. HSBC, which is the largest UK bank by total assets, ranked fourth. Development of the mortgage market In 2023, the value of outstanding in mortgage lending to individuals amounted to 1.6 trillion British pounds. Although this figure has continuously increased in the past, the UK mortgage market declined dramatically in 2023, registering the lowest value of mortgage lending since 2015. In 2020, the COVID-19 pandemic caused the market to contract for the first time since 2012. The next two years saw mortgage lending soar due to pent-up demand, but as interest rates soared, the housing market cooled, leading to a decrease in new loans of about 100 billion British pounds. The end of low interest rates In 2021, mortgage rates saw some of their lowest levels since recording began by the Bank of England. For a long time, this was particularly good news for first-time homebuyers and those remortgaging their property. Nevertheless, due to the rising inflation, mortgage rates started to rise in the second half of the year, resulting in the 10-year rate doubling in 2022.

Mortgage rates increased at a record pace in 2022, with the 10-year fixed mortgage rate doubling between March 2022 and December 2022. With inflation increasing, the Bank of England introduced several bank rate hikes, resulting in higher mortgage rates. In September 2023, the average 10-year fixed rate interest rate reached 5.1 percent. As borrowing costs get higher, demand for housing is expected to decrease, leading to declining market sentiment and slower house price growth. How have the mortgage hikes affected the market? After surging in 2021, the number of residential properties sold declined in 2022, reaching close to 1.3 million. Despite the number of transactions falling, this figure was higher than the period before the COVID-10 pandemic. The falling transaction volume also impacted mortgage borrowing. Between the first quarter of 2023 and the first quarter of 2024, the value of new mortgage loans fell year-on-year for fourth straight quarters in a row. How are higher mortgages affecting homebuyers? Homeowners with a mortgage loan usually lock in a fixed rate deal for two to ten years, meaning that after this period runs out, they need to renegotiate the terms of the loan. Many of the mortgages outstanding were taken out during the period of record-low mortgage rates and have since faced notable increases in their monthly repayment. About five million homeowners are projected to see their deal expire by the end of 2026. About two million of these loans are projected to experience a monthly payment increase of up to 199 British pounds by 2026.

The mortgage market in the UK declined in 2023, with the value of mortgage lending plummeting by nearly 100 billion British pounds from the previous year. That was because of the dramatic increase in mortgage interest, which made borrowing much more expensive. In 2023, gross lending to individuals totaled 225.1 billion British pounds.

In 2023, the largest share of mortgage sales in the UK was remortgage products, followed by first-time buyer sales. Of the total number of mortgage sales that year, remortgage products totaled almost 311,000 and first-time buyer mortgages, 282,000. A remortgage is when a new mortgage is taken out for the process of paying off a previous mortgage. In this case, the new property is used as security on the new mortgage.

The outlook for the residential mortgage market remained fairly neutral in 2019. Growth in gross mortgage lending is expected to be around 4.5% in 2020, which is broadly unchanged on 2019. During the forecast period (2019-23), gross advances are expected to record a compound annual growth rate of 5%, reaching £339bn. The supply side has been positively affected by the government’s schemes supporting first-time buyers, while stricter controls on buy-to-let lending will improve matters by reducing investor demand for properties. Read More

In 2023, only a small percentage of mortgage sales in the UK were sold directly, while the vast majority were sold through an intermediary. From the total 888,000 mortgage products sold that year, intermediary sales made up close to 747,000. Following the aggressive mortgage interest hikes in 2022, intermediary sales have fallen at a slower pace than direct sales.

The number of first-time buyer mortgage sales, by UK local authority, collected by the Financial Conduct Authority (FCA).

In 2023, the highest share of mortgage sales in the UK had a loan-to-value ratio between 50 and 70 percent. Across the country, the LTV ratio ranged between 64 percent and 75 percent, depending on the region.

The value of buy-to-let (BTL) mortgage loans for property remortgaging in the UK was forecast to continue to increase in 2025, after plummeting in 2023. In 2023, buy-to-let mortgages originated for a property purchase amounted to nine billion British pounds, while remortgage originations totaled 11 billion British pounds. By 2026, mortgage lending for purchases was forecast to remain stable, while remortgage lending was expected to rise to 28 billion British pounds.

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Home Equity Lending Market Size 2025-2029

The home equity lending market size is forecast to increase by USD 48.16 billion at a CAGR of 4.7% between 2024 and 2029.

The market is experiencing significant growth due to several key trends. One major factor driving market expansion is the massive increase in home prices, which has resulted in homeowners having more equity in their properties. Another trend is the rise in residential property values, leading to an increase in the number of homeowners with sufficient equity to access loans or lines of credit, with property management and digital lending playing a significant role in facilitating these transactions.
However, the lengthy procedures involved in securing these loans can present challenges for both lenders and borrowers. Despite this, the benefits of lending, such as lower interest rates compared to other types of debt, make it an attractive option for many consumers looking to finance home improvements, debt consolidation, or other major expenses. Overall, the market is poised for continued growth in the coming years.

What will be the Size of the Home Equity Lending Market During the Forecast Period?

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The market in the United States has experienced significant growth, driven by the increasing collateral value of residential real estate and the resulting equity available to borrowers. Monetary authorities' efforts to keep inflation in check and stable housing prices have contributed to this trend. Homeowners have utilized loans and lines of credit to fund various expenses, including home improvements, tax deductions, and debt consolidation.



The interest rate on these loans often remains competitive with other forms of borrowing, making them an attractive option for many. Banks and credit unions are the primary providers of these loans, offering borrowers the ability to access a lump sum amount or a revolving line of credit secured against their residence and property. Regulatory restrictions on high-interest debt and outstanding mortgages may impact the market's growth, but the demand for loans is expected to remain strong as homeowners continue to seek ways to access the value of their homes.

How is this Home Equity Lending Industry segmented and which is the largest segment?

The home equity lending industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD billion' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

Source

  Mortgage and credit union
  Commercial banks
  Others


Distribution Channel

  Offline
  Online


Geography

  North America

    Canada
    US


  Europe

    Germany
    UK
    France


  APAC

    China
    Japan
    South Korea


  South America



  Middle East and Africa

By Source Insights

The mortgage and credit union segment is estimated to witness significant growth during the forecast period.

Home equity lending is a financing solution for homeowners looking to access the value of their property. Mortgage and credit unions serve as trusted providers in this market, offering various financial services including loans and lines of credit. These institutions not only offer consumer loans but also manage deposits, handle checking and savings accounts, disburse credit and debit cards, and grant house loans. Credit unions, in particular, provide personalized services with live representatives, ensuring a human touch in understanding complex financial matters.

Homeowners can secure competitive rates on loans through credit unions, making them a preferred choice over other lenders. With a strong focus on consumer protection and affordability, mortgage and credit unions are an excellent option for homeowners seeking to tap into their for renovation projects or other financial needs.

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The mortgage and credit union segment was valued at USD 82.39 billion in 2019 and showed a gradual increase during the forecast period.

Regional Analysis

North America is estimated to contribute 47% to the growth of the global market during the forecast period.

Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.

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The market in North America experienced notable growth in 2024, driven by the increase in home values and fewer regulations. Homeowners in Canada have been utilizing their properties as collateral for loans, with residential mortgages accounting for 74% of household debt and lines of credit for 16%. The balance of Lines of Credit (HELOC) rose by 1% to USD 128 billion in February 2022.

In 2023, the number of mortgage sales in the UK stood at just over 888,000 for the year. This was the lowest figure on record. The majority of these mortgages were taken out via an intermediary, with a median loan-to-value ranging from 64 percent to 75 percent, depending on the region.

In 2023, the number of mortgage sales (PSD) in the UK stood at 888,000 million for the year. Of these, mortgage loans valued between 120,000 and 250, British pounds were the most sought after. This is unsurprising, given the average house price in the UK.

Mortgage interest rates in the UK were on a downward trend for more than a decade before soaring in 2022. In the second quarter of 2024, the average weighted interest rate stood at 4.8 percent - nearly three times the Interest rate in the fourth quarter of 2021. Mortgage rates also vary depending on the type of mortgage: Historically, fixed rate mortgages with a shorter term had on average lower interest rates. What types of mortgages are there? In terms of the type of interest rate, mortgages can be fixed and variable. A fixed interest rate is simply a mortgage where the rate of repayment is fixed, while a variable rate depends on the lender’s underlying variable interest rate. Furthermore, mortgages could be for a house purchase or for refinancing. The vast majority of mortgages in the UK are fixed rate mortgages for house purchase, and only a small share is for remortgaging. How big is the UK mortgage market? The UK has the largest mortgage market in Europe, amounting to nearly 61 billion euros in gross residential mortgage lending as of the second quarter of 2023. When comparing the total outstanding residential mortgage lending, the UK also ranks first with about 1.9 trillion euros.

Following the COVID-19 pandemic in 2020, the number of residential mortgage approvals in the UK plummeted. As the measures eased, the market rebounded, peaking at 157,000 mortgage approvals in November 2020. In 2022 and 2023, mortgage lending declined again as a response to the rising mortgage interest rates and the cooling of the housing market. In September 2024, the number of mortgage approvals exceeded 106,000 - up from about 70,500 in the same month a year ago. The increase indicated a rise in mortgage demand and an improvement in consumer sentiment.

The median loan-to-value ratio for mortgages in the UK in 2023 was approximately 69.5 percent. This meant that the average mortgage covered 69.5 percent of the property sales price, leaving the home acquirer to cover the remaining 30.5 percent with their own savings. Across the country, the LTV ratio was the lowest in London, and the highest in Northern Ireland.

The United Kingdom, Germany, and France were the countries with the largest mortgage markets in Europe in 2024, when considering the value of loans outstanding. In the second quarter of the year, the UK had more than 1.9 billion euros worth of mortgages outstanding. Other countries with large mortgage markets included the Netherlands, Spain, Sweden, and Italy - all exceeding 400 billion euros. One of the main drivers of mortgage activity is the cost of borrowing. In 2022, interest rates increased dramatically across Europe. Ireland, and Germany remained among the few countries with an average interest rate under four percent.

The median loan-to-value ratio in the United Kingdom (UK) for sales made in the fourth quarter of 2023 was approximately 69.5 percent. This meant that the average mortgage covered 69.5 percent of the property sales price, leaving the home acquirer to cover the remaining 30.5 percent with their own savings. Regionally, it was North East where the highest average LTV ratio was seen, at 74 percent. Number of mortgage loans In 2023, the number of mortgage sales (PSD) stood at just over 888,000, which was a decrease from the previous year when the number of mortgage sales dropped significantly. Mortgage interest rates The vast majority of mortgage loans were taken out with fixed interest rates. A fixed interest rate is simply a mortgage where the rate of repayment is fixed. The Financial Conduct Authority (FCA) defines a standard variable rate as "the rate that is the lender’s underlying variable interest rate”. It is not surprising that fixed interest rates are the preferred option for so many borrowers - two, three, five and ten year fixed interest rates saw a continuous decrease in recent years, before surging in 2022.

The value of residential mortgage lending decreased across many European countries in the first quarter of 2024. In the UK, new lending declined from about 66.8 billion euros to 59 billion euros between the first quarters of 2023 and 2024. One of the main reasons was the worsening economic conditions and rising interest rates. Together with France and Germany, the UK make up the top three biggest markets, both in terms of gross mortgage lending and outstanding mortgage lending.

In 2023, the number of mortgage sales in the UK stood at over 888,000. Of these, the vast majority were taken out by individuals without an impaired credit history. Additionally, the majority of these mortgage loans were taken out via an intermediary.

Mortgage interest rates worldwide varied greatly in 2024, from less than four percent in many European countries, to as high as 44 percent in Turkey. The average mortgage rate in a country depends on the central bank's base lending rate and macroeconomic indicators such as inflation and forecast economic growth. Since 2022, inflationary pressures have led to rapid increase in mortgage interest rates. Which are the leading mortgage markets? An easy way to estimate the importance of the mortgage sector in each country is by comparing household debt depth, or the ratio of the debt held by households compared to the county's GDP. In 2023, Switzerland, Australia, and Canada had some of the highest household debt to GDP ratios worldwide. While this indicator shows the size of the sector relative to the country’s economy, the value of mortgages outstanding allows to compare the market size in different countries. In Europe, for instance, the United Kingdom, Germany, and France were the largest mortgage markets by outstanding mortgage lending. Mortgage lending trends in the U.S. In the United States, new mortgage lending soared in 2021. This was largely due to the growth of new refinance loans that allow homeowners to renegotiate their mortgage terms and replace their existing loan with a more favorable one. Following the rise in interest rates, the mortgage market cooled, and refinance loans declined.