Findings published by the Intermediary Mortgage Lenders’ Association (IMLA) this week showed that while broker market share is likely to grow from 68.9% to 70% in 2016, it is predicted to remain unchanged in 2017 and may have even peaked.
Industry experts have said this could be down to the rules associated with the MMR bedding in, combined with expectations that lenders will attempt to grab back market share using innovations in technology.
While IMLA’s prediction only includes regulated mortgages, Robert Sinclair, chief executive of the Association of Mortgage Intermediaries (AMI), said including unregulated loans such as buy to let, would make a marginal difference to broker’s overall market share – adding around 2.5%.
“Buy to let only accounts for about 14-15% of the overall market, so it has to move a long way to move up brokers’ market share up a significant number of percentage points.
“The actual amount that brokers are writing has doubled since before the MMR, so that 70% growth is a significant swing as its 70% of a larger mortgage market, not a smaller market,” he added.
The MMR introduced the requirement for all mortgage sales to be advised, which in turn has dramatically driven up the volume of mortgages placed through intermediaries over the past two years.
Sinclair added: “I think the figures indicate that the changes caused by MMR have now washed through and therefore where we are now is probably static. I continue to believe that if the market grows, the vast majority of that will remain intermediated, not in direct, therefore I do still expect that percentage to grow.”
Paul Shearman, mortgages, protection and general insurance proposition director at Openwork, said the slowing of growth in adviser market share was likely down to lenders gradually implementing infrastructure and getting organised post-MMR.
“You certainly have some lenders that are putting investment into recruiting more advisers and new technology that enables to drive more business on a direct basis. But I’m not envisaging that to have a significant impact in the next 12-18 months,” he said.
Shearman added that while direct-to-consumer technology was unlikely to cause detriment to brokers over the next year or so, he did not rule out the potential for lender technology to negatively impact advisers’ share of the market in years to come.
“I think mortgage advisers are in a very strong position in that the quality of advice being provided is ever better. With more lenders coming on stream, which there are, you’re going to see brokers in a very strong position in terms of advising clients.
“It could have a significant impact over time, the question mark is whether or not you can design technological systems that meet regulatory requirements in terms of dealing with clients, and I’m not sure anyone’s cracked that yet,” he said.
