Sinclair predicts proc fees war

Association of Mortgage Intermediaries chief executive Robert Sinclair expects a spate of lenders to increase their procuration fees before the end of the year in order to meet their lending targets.

Speaking last week at the Association of Short Term Lenders’ annual conference in London, Sinclair said he predicts the average procuration fee paid for residential business will increase from 0.35 per cent to 0.4 per cent by the end of the year.

He said: “I think there is a recognition by lenders about the work that brokers have to do, which has gone up, and I think we are genuinely seeing a [mortgage rate] price war in the market.”

When asked by Mortgage Strategy if he thought proc fee increases would continue into 2015, he added: “I think we will see a general levelling out but it is hard to tell [at this point]. I think people will identify that it is what they need to do to write the business that they want.”

In the past two weeks National Counties, Leeds and Skipton have all increased proc fees, the later two for buy-to-let cases.

Separately, Sinclair said he expects base rate to be at 1 per cent by the end of 2015 although he does not think lenders will pass all of the additional cost onto borrowers by increasing their SVRs.

He said: “All I am hearing says we will see two base rate rises in 2015. The likelihood is that by the end of 2015, base rate will be 1 per cent. That is not going to cause massive payment shock or massive payment shock for people.

“Not only that, I do not think [all of the increase] it will be passed on through SVRs as they are already high.”