Regulation and funding the two main threats to brokers in 2010
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Mortgage brokers view regulation as the biggest threat to their business in 2010, a Mortgage Strategy online poll has revealed.
Just under a third, 31%, believe regulation will pose the biggest threat to their business in the new year, with funding a close second at 30%.
Dual pricing is in third place at 27% and the government was considered the least biggest threat to brokers’ businesses with just 12% of the vote.
The Financial Services Authority is expected to make several changes to the way brokers are regulated when it enforces proposals outlined in its Mortgage Market Review.
Robert Sinclair, director at the Association of Mortgage Intermediaries, says one of the biggest challenges is trying to get lenders to agree what responsibility brokers and lenders will have when it comes to checking affordability.
He says: “The FSA will be looking to create one standard affordability system for lenders to checkaffordability. But there is a lot of competitionamong lenders and it will be hard to get them to agree. Lenders will then have to agree a legal contract which says what they expect of the broker.”
Sinclair believes lenders will want to keep brokers on-side in 2010 and will have to find a way to keep paying them commission if the remortgage market stalls.
He says: “If we are going to get to the position where people are staying on long-term mortgages or lenders’ SVRs then lenders are going to have to put two options on the table for brokers.“
They could either offer a larger proc fee upfront or a trail commission if the broker continues to recommend that same product to the client and keeps them on the deal.”
Restrictions on lenders’ funding will also continue into 2010, with the Council of Mortgage Lenders predicting net lending of £15bnin 2010 and gross lending of £150bn.
But housing economist John Wriglesworth says these estimates are too conservative. He says: “I predict gross lending will hit £200bn in 2010.
The CML was always going to be conservative in its gross lending estimate in 2010 - just look at the way it has downvalued its repossessions estimates in 2009. Similarly, predictions for the housing market from the majority of economists are essentially flat-earth news and are based onnothing more than the market performance over the last six months.”
Steve Urwin, sales and marketing executive at Newcastle Building Society, says he supports Wriglesworth’s view that the lending market should grow.
But he adds: “Funding is a key issue for building societies in 2010 and we will only lend once funding is in place. Competition is driving up thecost of funds and this is made harder by the unfair advantages state-owned banks enjoy.”
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