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MAB reports £25.1bn gross mortgage completions fueled by PTs

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  • 19/03/2024
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MAB reports £25.1bn gross mortgage completions fueled by PTs
Mortgage Advice Bureau’s (MAB) gross mortgage completions, including product transfers, fell eight per cent year-on-year to £25.1bn.

According to MAB’s latest financial results, this consisted of £18.6bn in new mortgage lending, which is 21 per cent down on the year prior, and £6.5bn in product transfers, which is a 75 per cent increase on 2022 figures.

The report continued that market share of new mortgage lending rose to 8.3 per cent from 7.5 per cent in 2022.

Figures suggest that this is a 50 per cent increase since 2019.

“Much of this outperformance was a clear reflection of how MAB helped ARs and advisers to successfully pivot and focus their efforts largely towards refinance and protection opportunities, in the absence of an active purchase market.

“As a result, adviser productivity remained virtually unchanged despite the significant drop in purchase transactions. The ability to do this on the rare occasion of a major downturn strongly underlines the resilience of MAB’s operating model, and of course any drop in property transactions is typically made up once the housing market recovers,” it explained.

MAB said that its revenue had risen by 3.8 per cent year-on-year to £239.5m. Within that, mortgage procuration fees fell 8.1 per cent year-on-year to £98m, and protection and general insurance commission came to £93.1m, an increase of 13.4 per cent compared to the prior year.

Client fees rose by 19.7 per cent to £43.4m and other income decreased 14.5 per cent to £5m.

Statutory profit before tax came to £16.2m in the prior, a fall of around 6.8 per cent compared to 2022.

Its adjusted profit before tax during the period came to £23.2m, which compares to £27.2m in 2022. MAB said earlier this year that it would report a higher adjusted profit before tax due to better than expected trading in the last quarter of the year.

 

Adviser numbers fall in 2023 but AR recruitment activity ‘strong’ this year

Adviser numbers contracted by four per cent to 2,158, and at post-period end on 15 March adviser numbers stood at 2,135. The latter includes 116 advisers from Fluent.

MAB said that its ARs had more employed advisers than the intermediary sector average and consequently they lowered adviser numbers quickly due to a sharp fall in purchase transactions.

It added that overall fall in adviser numbers was “expected as firms consolidated and focused on efficiency and productivity rather than growth in such uncertain times”.

“We expect a better outcome in 2024, as existing ARs gradually become more confident in a sustainable recovery,” it said.

Revenue per mainstream adviser rose six per cent, which it attributed to a “full-year impact of the acquisition of Fluent”.

MAB said that although it did not expect to see “normal growth in organic adviser numbers” resuming until 2025, AR recruitment activity is “building very strongly and reflects the significant technology and lead generation developments seen at MAB over the last 12 months”.

“We believe our approach and implementation of the Consumer Duty across the business is also a major consideration for firms looking at MAB’s overall proposition,” it said.

 

MAB lead generation work showing signs of success

On the lead generation side, the firm said that its “investment and developments in early customer capture and nurture, data analytics and customer profiling” was already showing early signs of success.

This includes a growing number of opportunities from existing lead channels, improving lead conversion and identifying “high propensity for requirements of additional products and services.”

The broker said that while it was in the “early stages of implementation” it was going into an “exciting period as we layer additional opportunities of potential customers and their value to MAB into our existing environment”.

It said that its acquisition of Fluent had added price comparison websites and other major national lead sources to its arsenal.

MAB said that the above along with estate agency and new build were its largest lead generation areas, but that leads in these two sectors were mainly done by referral which can be “inconsistent”.

It said it was working on digital customer engagement and research tools to allow MAB to mitigate the reliance on human referral and “general additional opportunities”.

It is also working with its firms to optimize direct customer engagement and acquisition though organic website traffic and social media.

 

MAB subsidiaries and associates expect a ‘record performance’ this year

MAB said that all its subsidiaries and associates “strengthened their businesses last year” and were in a “good position to capitalise on a recovering market and are expected to resume some level of adviser growth in 2024”.

“Adviser productivity in this portfolio is significantly higher than the average across MAB and continues to build. We expect a record performance from our investments this year, and for them to increasingly contribute to our plans for accelerated profit growth,” it said.

The firm said that it had worked closely with Fluent to “re-balance the business” to better adapt to reduced new business, which saw “significant cost reductions and some key personnel changes”.

It said that while adviser numbers quickly fell, other cost savings and efficiencies continued throughout the year, which would make sure that the “business is in the best possible shape to capitalise on improving market conditions”.

The company said that Fluent had secured a new long-term contract with its largest provider of mortgage leads, which would support new business in 2024/25.

“With a better-balanced cost base, new lead sources and processes, and a strong management team, Fluent is well-positioned for a good recovery in revenue and profits in 2024,” it said.

MAB added that Lucy Tilley had submitted her resignation to the board in January this year and was serving her six months’ notice.

It continued that the “search for her replacement is well advanced and an update will be provided in due course”.

 

2024 showing ‘early stages of a market recovery’

Peter Brodnicki (pictured), MAB’s chief executive, said that “against a very challenging backdrop in 2023, MAB continued its exceptional track record of outperformance and market share growth in all market conditions.”

He continued: “Despite the severe market downturn, we continued our investment across the entire business and remained resolutely focused on long-term growth.

“Our proposition for growth focused mortgage and protection firms is outstanding, underpinned by best-in-class technology, lead generation and infrastructure, and our aim is to continue to further increase MAB’s differentiation versus our competitors and grow market share and profitability.”

Brodnicki said that the year had “started well” with both purchase and refinancing activity improving “significantly”.

“We believe this signals the early stages of a market recovery that builds towards a catch-up year in 2025, with pent-up demand continuing to be released as consumer confidence and affordability increase,” he added.

Brodnicki said that it expected organic adviser growth to “start building some momentum again in H2” as our AR firms “gain more confidence in the sustainability of the recovery”.

He noted that recruitment activity in terms of new AR firms is “exceptionally strong”, which he said showed the “significant strides we have made in terms of our technology and lead generation developments, as well as how we have engaged with and supported our partner firms with the introduction and integration of Consumer Duty”.

“Following an exceptionally strong year for our most mature investment First Mortgage, strong progress has been made in terms of efficiencies and lead sources in all our other AR investments, with adviser productivity in these firms being significantly higher than our average across the group.

“We expect a record performance from our investments this year and believe the portfolio will contribute to accelerated group profit growth over the medium term,” Brodnicki concluded.

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