Brokers tighten grip on mortgage market

Intermediaries control almost three-quarters of the mortgage market as retail-only lenders slowly lose their grip on the industry. Using lending figures, Richard Griffiths, managing director of Network Data, calculates the percentage of mortgage lending that originates from intermediaries to be 68%.

Back in June, Griffiths reported that in 2004 64% of mortgage business emanated from intermediaries. Further research reveals this figure increased by 4% to 68% in 2005.

Assuming this trend has continued it is likely that lending figures for 2006 will show intermediaries now hold 72% of the mortgage market.

Griffiths says: “Consumers are turning away from branches and to brokers for advice. I believe this trend will continue and probably plateau at around 80% as there will always be some consumers who are swayed by high street bank advertisements. But large lenders can’t afford to ignore brokers and must establish relationships with them if they are to maintain market share.”

Michael Bolton, chief executive of edeus, says the broker market continues to outdo the retail sector and that there is potential for brokers to secure 100% of the market.

He says: “A consumer can’t get whole of market quality advice from a single provider so a broker clearly has the upper hand. It isn’t economical for lenders to continue to use branch networks and in the next four or five years we will see consolidation eating up one or two direct-to-consumer lenders.”

Bolton also warns that should retention policies such as the one HBOS recently introduced take a grip on the market, the remortgage sector will be halved and 25% of brokers will be put out of business.

And he adds: “The backlash against retention policies has already begun and brokers must accept that retention is an attempt to take them out of play.”

A spokesman for the Council of Mortgage Lenders says: “Brokers represent an important channel of distribution for lenders, but it is important that there is a choice of channells for customers.”