Crisis will leave UK brokers £625m worse off

Edeus\' managing director Alan Cleary has warned that the ongoing liquidity crisis could wipe £625m off the total income potential for advisers in the UK mortgage market.

Following detailed analysis of the sector, edeus has calculated a critical 30% deficit in the amount of finance expected to be available to mortgage borrowers in 2008, and subsequently expects a dramatic reduction in payable procuration fees.

This prediction has been made on the back of a recent research initiative that assessed various lender and product withdrawals across the sector.

According to the Council of Mortgage Lenders gross lending for 2007 totalled £364bn but due to the lack of investor appetite for mortgage backed securities and the consequential impact on lenders, edeus expects that gross mortgage lending in 2008 could be as low as £250bn.

All areas of the market have been affected including; specialist, buy-to-let and mainstream.

For this reason it is likely that all professional advisers will feel the impact, and this reduced commission pool could spell dire consequences for the professional advice industry.

Cleary says: “Although a mass exodus from the mortgage advice sector is unlikely, there is no doubt that advisers are going to find it tough over the next few months.

“The on-going liquidity crisis has led mortgage providers to dramatically scale back lending targets and as such gross lending could be down by as much as £114bn.

“As a result there will be less procuration fees to go around, and many advisers will struggle to earn as much as they have done in previous years.

“The sad reality is that investor confidence in mortgage backed securities is at an all time low and it is likely to be 2009 before we begin to see the market return to any degree of normality.

He adds: “It is vital that advisers begin to consider additional revenue streams to ensure they are able to continue to operate in a commercially viable manner. We are fully aware of the predicament our broker partners face and as such we are currently working on a key initiative that we hope will be of assistance in the very near future.”