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Brokers on track to break annual market share record

  • 17/12/2015
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Brokers on track to break annual market share record
Brokers arranged 69% of new lending by value in the first nine months of the year, putting them firmly on track to surpass the previous record annual share of 66% achieved in 2007.

This is an increase of 8% compared to the same period last year.

A report from the Intermediary Mortgage Lenders Association (IMLA) shows brokers arranged lending worth a total £85.9bn in Q1 to Q3, which already exceeds the annual totals from 2009 to 2013. It is also just 12% short of 2014’s total of £98bn.

On a quarterly level, brokers also excelled – arranging loans valued at £33.3bn in the third quarter alone, the highest quarterly total since Q2 2008.

IMLA’s report credits several key changes for the upward trend in brokers’ market share over the past 30 years.

These include the widening range of lenders, including lenders exclusively using broker distribution; the growing complexity of mortgage features and pricing; and regulatory changes, including the Mortgage Market Review (MMR).

Many lenders have scaled back their branch networks, and some smaller lenders have ended direct distribution altogether, due to the MMR requiring mortgage sales staff to provide advice rather than just information, which requires additional qualifications.

The report also found that brokers are well positioned to identify which products are best suited to a particular customer’s needs due to increased lender competition, a greater range of products and more would-be borrowers falling into ‘non-standard’ categories.

Remortgagors and homemovers are using intermediaries more than ever, with both increasing 9% from 55% to 64% between 2006 and the first three quarters of 2015.

First-time buyers going direct increased from 32% to 37% between 2006 and 2014, however this fell to 29% between Q1 and Q3 this year.

Despite brokers reclaiming market share this year, the percentage of first-time buyers going direct is still higher than it was in 2007 when the intermediary channel was it its strongest, which may be caused by lenders’ marketing activities to first-time buyers.

The IMLA report showed that while technological advances tend to lead to more customers going direct within financial services, this has not happened in mortgage lending where a majority of customers still feel the need to speak to a professional.

It suggests that this is partly due to the complexity of mortgages and the number available.

Peter Williams, executive director for IMLA, said the intermediary channel had been ‘revitalised’, and that the emphasis on advised sales had changed the landscape.

He said: “Today’s market is more regulated and more competitive than any point since the recession, and brokers’ expertise and impartiality means that they are well-suited to navigating the mortgage maze on behalf of borrowers.”

He added that while most customers still prefer to speak to a professional about getting a mortgage, changes ‘undoubtedly’ lie ahead and that consumer interest must remain at the core of the process – whatever it looks like in the future.

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