The attractiveness of higher risk and niche business areas to mortgage lenders is set to increase in future, UK Finance has predicted.
In its study, The Changing Shape of the UK Mortgage Market, co-authored by Hometrack, the trade body predicted that the flat nature of mortgage debt will result in this trend.
UK Finance said: “Lower house price growth and static sales volumes, together with more five-year initial mortgage terms, are set to limit the potential growth in gross mortgage lending in the near term.
“The average household moves once every 20 years and this means competition between lenders will intensify and the perceived attractiveness of higher risk business will increase.”
UK Finance also suggested that mortgage lenders are being forced into becoming overly risk averse, which is contributing to the low number of arrears and possessions.
Elsewhere in its paper, the trade body suggested that new technologies and the availability of data will help lender do more business directly with consumers.