However, although nearly a third of lenders expect gross lending through intermediaries to increase, twice as many expect execution-only to increase too.
Brokers predict the opposite with Terry McCutcheon, managing director of The Finance Planning Group saying: “I would expect that more customers would go to quality mortgage brokers for their mortgage advice, rather than buying complicated mortgage products “execution-only.”
Coreco Partners director Andrew Montlake, said the latest RBS mortgage advice scandal highlights the risks of lenders offering advice in-house.
“Lenders will try to push execution only advice and this is no doubt something they will look to battle on,” he said.
He added: “I would hope, however, that regulators remain firm on ensuring that the majority of borrowers take advice as whether the public realise it or not, getting proper advice on all mortgage transactions is in the consumer’s best interest.”
However, the Mortgage Efficiency survey from Iress, which polled 10 banks lending 66% of the mortgage market, showed the massive swing away from branch toward intermediary.
The swing toward advice driven by the Mortgage Market Review and consumer fears over navigating the market have been confirmed with a 15% fall in lending through branch in 2013.
However, telephony (direct) and internet sales both saw a marginal push upwards between 2013 to 2014.
Henry Woodcock, (pictured) principal mortgage consultant at Iress, the supplier of wealth management, mortgage and financial markets systems, said: “One thing is clear. Intermediaries have played an increasingly important role helping consumers navigate the murkier waters caused by regulatory change. We are likely to see lenders develop their execution-only offerings in the coming year, but that won’t diminish the part being played by brokers in securing the best outcomes for customers.”
According to the survey, the intermediary channel proved most effective for buyers, with 70% of applications going to offer up from 62% a year ago. However, across all channels, almost 40% of mortgage applications do not proceed to offer.
Mutuals continue to lean more heavily on brokers than banks, with 63% of mortgage lending through advisers against 52% for banks.
Nationwide, YBS Group and National Counties were the only mutuals surveyed, with the outcome appearing to favour broker channels, as the Building Societies Association said in H1 2013, across the sector, mutuals drew 50% of their business from brokers.
A BSA spokesperson said: “This year it is 49%. Clearly within that there will be variations both by organisation and time – managing flows, business models and so on. Intermediaries are clearly an important part of the mix.”
The Mortgage Market Review, which went live on 26 April this year appears to have slowed lender processing with 44% of offers made in less than 14 days, down from 56% last year. Equally, just 9% of offers are issued in less than 5 days, down from 25% in 2012.
Woodcock said: “There’s no doubt that the MMR has taken its toll on the time taken to secure a mortgage. More comprehensive affordability testing and lengthier interviews have slowed the application process. Added to which, much of this remains a manual process among lenders as they adapt, exacerbating the problem. That said, demand for mortgage finance has been so strong in the year so far that lending has continued at a rate of knots despite the disturbance.”
Lenders involved in the survey include: Aldermore, Clydesdale and Yorkshire Bank, The Co-operative Bank, HSBC, Lloyds Banking Group, National Counties, Nationwide, Royal Bank of Scotland, Santander and YBS Group.
