all intermediary business. Moreover, over half of all remortgages consisted of borrowers releasing additional equity from their homes, suggesting distributors received a significant proportion of this business. Remortgaging consistently accounted for between 42% and 46% of all intermediary and distributor business in the 12 months to Q2 2006.
Despite lender and government-led initiatives to boost the first-time buyer market, only 20% of all intermediary business over ” It is the willingness of the lender to look at and consider a case on its own merits which really matters to intermediaries”the previous year had come from first-time buyers. In fact, first-timers accounted for 17% of intermediary business in Q2, 2005 then 19% for the following two quarters then 18% in Q1, 2005 and 19% again in Q2, 2006.
Charterhouse says prime lending still accounted for the majority of intermediary business, with around 69% of prime business coming though intermediaries. But self-cert and sub-prime lending – both specialist distribution lending channels – accounted for what the report claims was a significant minority in the first six months of 2006. Self-cert business accounted for 20% of intermediary business in the first half of 2006 while sub-prime accounted for 17% of intermediary business over the same period.
The research says the average mortgage intermediary placed business with 11 lenders over a three-month period but three of these lenders on average won the majority of the individual intermediaries’ business in that same period, taking around 60% of cases from intermediaries. Charterhouse argues that the results reflect the level of pricing competition in the market.
In what distributors are likely to consider a vindication of the service they provide, the report also states: “At any given customer interaction, an intermediary is faced with a number of lenders they could equally recommend to their client, based on product, as best advice. It is the critical factors of underwriting certainty and service that are proving the biggest differentiators.”
The report goes on to say intermediaries have welcomed the increased move by lenders to affordability-based pricing of products instead of strict income multiples, arguing that such moves have helped to bridge the gap between rising house prices and limited borrowing capacity.
The role distributors play in placing cases is also shown to be vital, with the research stating that while lenders have made strides in helping potential customers increase the amounts they borrow, it is the willingness of the lender to look at and consider a case on its own merits which really matters to intermediaries. The research suggests lenders thatapply strict criteria and reject anything that falls out of those criteria are losing out on intermediary business as a result.
Distributors that have created their own sourcing systems have also gained an advantage over lenders, says Charterhouse, as it suggests the majority of intermediaries have, since regulation, sourced key facts illustrations from distributor sourcing systems as well as Trigold and Mortgage Brain. It says 62% of intermediaries stated they prefered to use sourcing systems to obtain KFIs while 35% said they obtained them from lender websites.
The development of technology since the onset of regulation has also been welcomed by mortgage intermediaries. Facilities such as instant binding decisions and product cascading have meant online systems are now providing a more efficient link between lenders and intermediaries, says the report. Almost all intermediaries (98%) were placing business online, the report says, with intermediaries saying they submitted nearly two-thirds of their business online in the first half of 2006. Charterhouse says it expects the proportion of business submitted online to have increased significantly as 87% of mortgage brokers said they expected to increase their online application volume further.
Overall, mortgage intermediaries were positive about the way in which technology has developed in the mortgage market. Most said they were confident that a case submitted online reached the lender and was processed. But there are things distributors are only now beginning to offer which intermediaries say they still need, including