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Mortgages in the United Kingdom (UK) - statistics & facts

Mortgages have been around for centuries. They are a key macroeconomic driver and a crucial mechanism for the transmission of monetary policies. Without the mortgage market, acquiring a home would be impossible for most people aspiring to have one of their own. Although the United Kingdom (UK) ranks relatively low compared to other European countries by home ownership rate, it is the largest residential mortgage market in Europe. This comes as no surprise, since the predominant share of home owners in the UK relies on a mortgage for home financing.

In 2020, there were just over one million mortgage sales in the UK, with remortgage loans accounting for the largest share of borrowers, followed by first time buyers and the group of home movers or subsequent home buyers. Mortgage loans valued between 120 thousand British pounds and 250 thousand British pounds were the most sought after, which had to do with the average house price in the UK.

Besides monetary policy, mortgage rates are also influenced by supply and demand, employment, inflation and economic growth. Mortgages vary in their interest rate and return period. A fixed interest rate is simply a mortgage where the rate of repayment is fixed, while the variable rate fluctuates over time depending on an underlying benchmark defined by the lender. If rates are expected to go down, many borrowers might choose a variable rate over a fixed one and vice versa. In 2020, the majority of UK mortgages were at a fixed rate.

There are two main types of mortgage lenders in the UK – banks and building societies. Building societies, which are central to the UK mortgage market, began as an institution in the late 18th century and have since focused on mortgage lending and savings. Unlike banks, they are not listed on the stock exchange and are run by their investing members through a board of directors.

Nationwide is the largest building society in the UK, accounting for close to 250 billion British pounds in assets as of 2020. Unsurprisingly, Nationwide also leads the ranking by number of members, with approximately 14.8 million investing members. It accounted for between 15,000 and 46,000 mortgage loans approvals monthly, worth between three and eight billion British pounds from January 2017 to March 2021. While Nationwide is an undisputed leader on the mortgage market in the UK, it only comes second in terms of gross lending. In 2020, Lloyds banking group was the biggest mortgage lender in the UK, with a market share of close to 20 percent.

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