Mortgage clubs redress the balance of power

Since they came into existence, mortgage clubs and networks have been at the forefront of promoting the interests of intermediaries and their customers.

Using their distribution power they have been able to challenge and pressurise lenders in a way that individual brokers would have found impossible.

As a result they have helped not only their own members, but also the entire mortgage market to develop. It is essential for the efficient running of our market that intermediaries have the power to be heard and make their views count. It is brokers, after all, who deal with customers and are best placed to understand their priorities.

It’s about time that everyone recognised the vital role that clubs and networks play.

That is why we were honoured to be invited to Premier Mortgage Services’ 10th anniversary party and happy that we could contribute to the celebrations by sponsoring part of the event.

Attendees certainly seemed to think our creative way of saying happy anniversary was enjoyable.

As the largest club for brokers, PMS has every reason to be proud of the work it has done to promote intermediaries’ interests over the past decade.

I have long maintained that there is an unhealthy power imbalance in the mortgage market. Large lending firms, particularly the major high street players, have been able to dominate intermediaries.

Because of their smaller size and the fragmented nature of the market it has been difficult for brokers to pressurise lenders to offer more for. As a consequence, larger lenders have got away with being largely unresponsive to intermediaries’ needs.

But mortgage clubs and networks have helped to redress this power imbalance.

By aggregating the distribution of their members, they have harnessed the power needed to challenge lenders.

John Malone of PMS and the other leaders have been able to sit in with the top people at the big lenders and demand more for brokers. Exclusive products, improved services and higher proc fees have been the result.

Promoting the interests of intermediaries is particularly important when dealing with high street lenders. These lenders would prefer to distribute through their own branches rather than brokers as they would not have to pay broker fees and so could make higher profits.

So it is only natural that they have promoted the interests of their branches above brokers. Clubs and networks are needed to ensure that these len-ders pay attention to brokers’ needs.

There is less of an issue when it comes to lenders such as ourselves that are committed to intermediaries as our only distribution channel. It is entirely in our interests that we do everything we can to promote the broker market.

The benefits generated by mortgage clubs and networks have spread beyond their members to the intermediary market as a whole, helping to put it in a position where it accounts for up to 75% of originations. Their role in the market will only become more significant over time.