As far as the last year is concerned, lenders, brokers and homeowners have never had it so good. Interest rates remain low with little fear of a substantial hike, house prices continue to march upwards, and both lenders and brokers are benefiting from the high levels of activity in the housing market as a whole.
But as we all know, a dark cloud is hovering over the mortgage market. While most in the industry recognise the value of statutory regulation to the consumer, its outcome could have a staggering effect on the distribution of mortgages.
The ball is in lenders’ courts. Although most would prefer to do all business direct, they recognise the value of intermedi-aries in the supply chain.
But with the onset of regulation the nature of the intermediary/lender relationship could change.
This was one of the topics covered in the first Mortgage Solutions ‘Power Hour,’ a monthly round table discussion between some of the UK’s leading mortgage players.
At the moment it is estimated that 25% of mortgages are sold through a club or a network ‘ as witnessed when IFAs were regulated ‘ and this can only be expected to grow when the FSA takes control.
Stuart Glendinning, a director of Mortgage 2000, made the point that we could witness a huge shift of power as a result.
‘Brokers are going to have to pay more under regulation and that will force them to join up with networks. The negative aspect of regulation is that it empowers the hands of certain organisations and why that is good for consumers is not clear to me,’ he said.
Cost issues aside, there is also a consensus lenders will only want to deal with clubs or networks that provide a compliance function ‘ to ensure each case does not fall short of the FSA’s stipulations, as Michael Bolton, head of lending at Birmingham Midshires explained.
‘From a lender’s point of view there is definitely an argument that says ‘I would much rather deal with a lender because I know that the compliance solution for their membership is 100% squeaky clean,’ instead of having individual relationships with 5,000 or so brokers.’
Regulation need not cast a death knell on your business. It is fair to say that life will not be easy for the small, independent broker ‘ but those that come out on top in 2004 will be those that start developing their strategy now.