“Most of our people have never had it so good”, Harold Macmillan, 20 July 1957.
Fifty years after our then Prime Minister’s famous sound bite, the same was true for UK mortgage intermediaries. Following over 20 years of long-term growth in their share of new mortgage business, the peak was reached in 2006-7, when intermediaries placed 57-58% of all new UK mortgages.
Then the sky fell in. The years from 2009 were extremely difficult, with intermediaries’ share of new business falling as low as 45%. Many went out of business; others soldiered on, making little or no profit. Since 2011, the intermediary channel has risen phoenix-like: by 2015, a record 59% of new mortgage takers reported using the intermediary channel, helped by the impact of the Mortgage Market Review.
Our monitoring of consumers’ future intentions suggests that there is further growth to come: between 2014 and 2015 there was a 10 percentage point rise in the share of future mortgage seekers intending to use an intermediary. The key drivers for consumers choosing the intermediary channel are ‘better deals’ and ‘better/independent advice’. The main perceived advantage of going direct is ‘no/lower fees’. Not offering advice can hit direct lenders hard: only 11% of mortgage holders like the idea of arranging a mortgage purely online versus 46% who dislike that idea (the rest don’t mind either way or have no clear views).
Intermediaries themselves have confirmed a sea change to us in their fortunes over recent years. Comparing our 2015 and 2011 studies:
- The average intermediary’s annual case load is up by 29%.
- There has been a lift of 32 percentage points in the share of intermediaries reporting a profit from their mortgage business.
- And a lift of 42 percentage points in those feeling ‘very confident’ about the future outlook for their business.
While the average intermediary’s annual case load remains 15% below the 2007 peak, things have hardly ever been so good. As one said: “People need professional advice from a mortgage adviser. The banks are getting out and people are seeking advice from mortgage brokers.”