New entrants to the market and regulatory changes, such as the Mortgage Credit Directive, have also pushed providers and master brokers to price their products and services more competitively, advisers said.
A shift in broker attitudes were apparent in a recent online poll carried out among Mortgage Solutions readers showing that 70% of brokers agree that specialist products have played a bigger part in the advice process over the last 10 months. Just 12% of brokers do not consider these products for their customer base, while 18% are less focused on specialist lending than they were a year ago.
Adrian Anderson, director of Anderson Harris, explained that while the broker has considered specialist lending since the business launched in 2012, regulation and improved innovation have encouraged it to look at the sector in more detail.
“Bridging has been the biggest growth area for our business in the past 12 months. Rates for this have come down significantly with private banks offering bridging rates at their standard pricing,” he said.
Anderson added that as client cases grow in complexity, the products required to suit their needs can be trickier to get hold of.
“Specialist lenders are particularly good for this,” he added. “We have always been keen to advise clients with complex needs so the only barrier has only been the lack of demand for certain types of lending. Adding value is the best way to preserve your client bank and so being able to advise on a large number of products and an extensive suite of lenders is key. Pricing and fees have been a barrier with clients looking for the product but the prohibitively high fees putting them off. This is now changing.”
The Loans Engine and Complete FS are just some of the master brokers that have reviewed their fee structure in recent months, with the latter introducing a £199 flat fee while abolishing any master broker fee and allowing the intermediary to set the advice fee.
Mortgage clubs and networks have also changed their attitudes to specialist lending, with some introducing dedicated master broker panels, while others such as Legal and General Mortgage Club have launched a direct to broker panel of specialist lenders.
Stuart Gregory, managing director at Lentune Mortgage Consultancy, agreed that most networks have adjusted their perspective.
“A lot of mortgage networks have changed their viewpoint since the EU Credit Directive came into force. Regulation has made secured lending more of a structured process in that the focus on master brokers has boosted the level of competition between firms. We’ve seen so many of them this year reducing their upfront fees that a client has to pay out and sometimes in the past that would be enough to put a client off a secured loan,” he said.
“The same can be said for bridging. It’s been the newer entrants to the market who have really shaken things up and encouraged the other providers to act in order to remain competitive and not price themselves out of the market. It’s a much better market than it was 12 months ago.”