According to MAB’s interim results, market share of new mortgage lending rose by 19 per cent in the first half of the year to 8.1 per cent compared to the same period last year.
Gross mortgage completions, including product transfers, stayed flat at £12.1bn, and excluding product transfers, this figure fell 12 per cent to £9bn.
Within this figure, new mortgage lending fell 13 per cent to £9bn over the period but product transfers increased by 61 per cent to £3.1bn.
Overall, the firm reported adviser numbers at 2,114 as of 22 September, which includes 129 advisers from Fluent. MAB completed the acquisition of the firm in July last year.
This is up from 2,109 at the end of June, which represented a fall of six per cent compared to the end of last year. MAB said that this was due to the mini Budget leading to existing appointed representative (AR) firms to focus on “efficiency” and pausing recruitment.
The company noted that the average number of mainstream advisers grew by four per cent to 1,966 compared to the same period last year and revenue per adviser had jumped 17 per cent year-on-year following the acquisition of Fluent.
The increase in revenue was partially attributed to a lower number of new advisers who take time to “reach full productivity”.
The firm’s gross profit in the first half of the year grew by nearly a third to £32.9m compared to the same period last year, and its revenue increased by nearly a quarter to £117.5m over the same timeframe.
On the technology side, MAB said that its new lead management system and lead generation initiative such as the Mortgage Monitoring Tool and Home Buying App were expected to further improve customer retention and help firms identify new lead sources would “drive productivity and further market share growth”.
Fluent performance ‘below…expectations’ but growth expected
MAB said that the “significant market downturn” had impacted Fluent across all product lines, and unlike mature first charge mortgage business it did not have a “significant client bank” to counter this effect.
It noted that lead sources had also been “adversely affected” in the short-term in terms of lead numbers and conversion potential.
MAB said that it had implemented a programme of “right-sizing the cost base” and this had been “substantially completed” in the first quarter of the year.
The company said that once inflation and interest rates are closer to their peak, demand will return and it was confident that Fluent would “return to its historic growth path”.
MAB said that its expertise and solutions around customer protection and retentions were “embedded” in Fluent, which would enhance its revenues and profit margins.
“Fluent’s performance to date has been below our original expectations due to the timing of completion of the acquisition relative to the onset of the market downturn. However, the compelling strategic rationale for acquiring the business remains.
“Fluent is the leading intermediary dealing with the fast-growing national lead source sector and has continued to grow its new lead sources in H1 2023 with notable blue-chip additions in the first charge mortgages division,” it said.
MAB continued that both firms have a “strong pipeline” of new national lead sources and it looked to team up with firms that have “market leading processes, technology, and quality of service and that can drive the best consumer outcomes”.
“The group is ideally positioned to capitalise on this momentum, and in the meantime we will continue to drive further efficiencies within Fluent in H2 2023 and into 2024 which will benefit the Group’s future profitability,” it noted.
MAB said that plans to leverage its acquisition of specialist protection platform Aux had “progressed well” and Vita Financial was bringing out a proposition to “access the largely untapped UK business protection market”.
MAB in ‘strong position to capitalise on recovery’
MAB said that while there had been an improvement in Q2 and it had ended the half year “modestly ahead” of the board’s expectation, market conditions had “toughened again” in Q3.
It explained that this had impacted purchase and refinancing activity, with the expectations that the peak of the base cycle had been reached coinciding with drops in mortgage rates.
The firm added that this had changed the behaviour of customers in terms of the “timing and their urgency to commit to a new fixed mortgage rate, whether that be a product transfer or remortgage”.
MAB noted that the summer months had experience a “sharper than usual” seasonal fall in house purchases.
Looking ahead, the firm said it was taking a “more cautious view” in expected activity levels and now expects the group to report an adjusted profit before tax of £22m for the full year.
It added that this figure could be higher as some upside is expected as market conditions stabilise.
The firm said that it expected MAB Group excluding Fluent to be “at least in line with its original expectations for the year”.
MAB said that it expected underlying level of demand for homeownership and home moves to stay strong and that this would strengthen once the base rate has peaked and falls back and inflation is more controlled.
It continued that once demand had recovered it would be in a “very strong position to capitalise on the recovery and the inevitable catch-up in house purchase transactions that will follow”.
“This will be boosted by continued increases in operational efficiency and market share, and the momentum that is building in our lead generation and retention initiatives,” MAB said.
The company said its new appointed representative (AR) pipeline continued to “build strongly” and it expected to do so for the rest of the year.
Organic adviser growth will return when the economic outlook is more certain and our AR firms are able to plan with far more confidence.
Peter Brodnicki (pictured), MAB’s chief executive, said that it had been an “exceptionally challenging year” as interest rates continued to rise.
He continued: “This has clearly impacted consumer confidence, resulting in many people deciding to delay their house purchase, whilst for others there is understandably a reduced level of urgency. This has created a toughening market for mortgage brokers as the year has progressed, compounding the damaging impact of the mini Budget last September.”
“However, against this difficult backdrop I am pleased with how MAB has significantly outperformed the market, with the organic business performing above expectations. To ensure we are in the best possible shape when market conditions improve we have continued to carefully invest across the entire group to deliver optimal business and adviser efficiency.”
Brodnicki added that this focus had also been a “priority” for Fluent, where short-term impact of the downturn was more “strongly felt, and indeed magnified due to the business having been in such a strong growth phase at the point it was acquired by MAB”.
He added: “MAB has an exceptionally strong track record of outperformance, and the progress made this year in the development of new lead opportunities for Fluent and the rest of the group will underpin our plans to deliver continued market share growth in 2024, even if difficult market conditions continue to prevail.
“There is a great deal to be positive about and our lead initiatives, including the addition of Fluent to the group, will continue to strengthen our addressable market and growth plans, whilst offsetting the potential impact of any downward cycles in the future.”
