Brokers anticipate sub-prime growth

Mortgage intermediaries expect more growth in specialist mortgage lending, the latest research from BM Solutions reveals.

Over half of all mortgage cases introduced by brokers are mainstream. Nearly a quarter are self-cert, 12% are buy-to-let and 10% are sub-prime.

The BM Solutions SMART index of broker confidence shows that advisers expect to do 4.9% more sub-prime mortgages in the first quarter of 2003. Intermediaries expect to see a 4.3% increase in self-cert cases, 2.4% for mainstream, and 2.1% for buy-to-let.

The average loan size for self-cert and mainstream mortgages arranged by intermediaries is £122,400 and £119,800 respectively. The average for buy-to-let is £90, 200 and for self-cert £98,700.

Brokers continue to think through the practical impact of regulation for their business.

The proportion of intermediaries that believe there will be no effect on their businesses from mortgage regulation has fallen from 30% in the last SMART survey to 21%.

The proportion saying that regulation will bring increases in paperwork rose from 18% to 30%.

But some 28% – up 4% from the last survey – expect an increase in business thanks to a less competitive intermediary market post-N4.

Michael Bolton, director of mortgages at BM Solutions, says: “The results show that intermediaries continue to be bullish about specialist lending growth, especially in sub-prime and self-certification.

“It&#39s also obvious that the majority of intermediaries are getting ready for the effects of mortgage regulation and potential increases in business volumes and paperwork.”