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Don’t be put off considering joining a network

The latest news from the Council of Mortgage Lenders is that although the volume of mortgages for house purchase increased by 4% in February, the volume of remortgage business fell by 20% compared with the previous month. The figures are even gloomier when viewed on an annual basis. The number of house purchase deals is down by 47% and remortgage deals by 58% compared with the same period last year.

With lenders’ SVRs looking attractive compared with new mortgage deals and with falling house prices continuing to erode equity levels it is unlikely that we’re going to see a sudden increase in demand for mortgages in the near future.

Lenders won’t be launching high LTV products any time soon and even the equity release market, which once showed such promise of bucking the trend, looks as if it is going to follow the rest of the mortgage market into a downward spiral.

So brokers have to be realists. The market is at a low ebb and is going to stay that way for some time – certainly for the remainder of this year and probably into 2010.

The dire outlook is encouraging an increasing number of brokers to consider joining networks so they can gain access to not only regulatory support but also help with new business activities.

A number of networks are reporting a healthy rise in enquiries from brokers but sadly, at the very moment they want intermediaries to have faith in their offerings, some have decided to throw a spanner in the works by withholding proc fee payments. This is tarnishing the reputation of the sector.

I can understand brokers’ caution when it comes to joining networks, especially when they hear horror stories about colleagues going out of business because of unpaid fees.

All I can say is that all networks are not the same. The network proposition is more relevant and valuable today than it has ever been and if brokers are thinking of becoming appointed representatives or switching networks they should take the trouble to check out their intended principals.

But how do brokers do that? The textbook answer is to check out networks’ finances but that can be almost impossible as publicly available financial data is inevitably out of date by the time brokers get their hands on it.

The best solution is to talk to other members. Their opinion counts for a lot and if they are happy with the service they are getting from their network, brokers probably don’t have much to worry about.

And just to prove that bad news comes in threes, the Financial Services Authority has chosen a great moment to impose hefty fee increases on networks, some of which will rise by more than 100%.

Networks are not the cause of increased costs at the FSA so why punish us? In fact, networks could help the regulator cut its costs if more brokers join our ranks and don’t have to be individually monitored.

I will continue to campaign for the FSA to think again about network fees and encourage other networks to do the same.

Let’s hope that this is the last of the bad news for the time being and that we can look forward to more positive news in the months ahead.


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