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How to estimate number of mortgage loans issued in UK per year?

Case estimation Interview Study
Neue Antwort am 5. Juni 2020
4 Antworten
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Anonym A fragte am 3. Juni 2020

Hello everyone,

could anyone help me in answering this market sizing question? Thanks!

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Clara
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bearbeitete eine Antwort am 3. Juni 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

This is a classical and rather simple market sizing -you will see that, after doing some, they are all the same-.

I would:

  1. Calculate the total # of households in the UK, for which you divide:
    1. Total population
    2. Average household (usually for Europe and US is 3)
  2. Asuming each household only asks for 1 mortgage loan (you can also double check this with the interviewers, in case they want you to do 1.2 or 1.3 for those who have more than one, investors, etc), and each household´s life is 80 years (average life), divide by 80

Hope it helps!

Cheers,

Clara

(editiert)

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Anonym antwortete am 3. Juni 2020

Hello,

Here is a simple approach. First I will separate households aquisitions and real estate investments.

For Households :

  • Number of people in UK
  • Number of households in UK
  • % of households who are new proprietary + % of households who are selling an asset to buy a new one
  • Average value of real-estate assets (better to breakdown e.g. big cities vs. rural areas)
  • % of bank funding for each asset (=1-% of own funds brought)

For investors : exactly the same approach for real-estate investors (replace households by investors).

Best,

David

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Udayan
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antwortete am 5. Juni 2020
Top rated Case & PEI coach/Multiple real offers/McKinsey EM in New York /12 years recruiting experience

Few things to add to the answers you already see here - account for these if you have time for your answer to increase the accuracy

1. Make sure you account for people with more than one home - you can use some kind of multiplier

2. Account for length of a mortgage - 30 years is typical in the US. After that many people refinance to get liquidity

3. Purchases by non UK citizens

4. Purchases with all cash

Best,

Udayan

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Ian
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antwortete am 4. Juni 2020
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there.

  1. Population of the UK
  2. % adult poopulation
  3. # of adult population
  4. % of population in each age bracket OR split into family units vs single
  5. % of each group that likely owns a home (think critically here: younger, single people would be less likely. Probably <50% of people in their 20s own a home. Probably more than 80% of those >40 own a home...but then this is divided by 2 as most are in long-term partnerships!)
  6. Home = mortgage and voila :)

Note, you may want to may it complicated and think about investors. Your call. I would either 1) Account for investores or 2) Actually do steps 1-6 for anyone renting or owning (and then split renters by those who might be renting froma corporate body vs an individual)

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Clara

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McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
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