The news last week that the number of mortgage brokers has shrunk to a new low of 12,500 is further evidence of the high price the market has paid during the credit crunch.
It wasn’t long ago that there was talk of there being some 30,000 intermediaries in the market. OK, this figure was anecdotal but a contraction of almost two-thirds says it all.
But when you consider the dramatic fall in mortgage finance it’s hardly surprising. At the height of the market in 2007 some £360bn worth of gross mortgage lending was completed. Take away the figure of £70bn that lenders argue is always transacted in good times or bad through their branches, and that still left brokers with a market share of £290bn.
In 2009 we saw £143bn in gross lending. Minus the direct share, that left brokers with £73bn. This 74% decline in business distributed by intermediaries in two years explains the Association of Mortgage Intermediaries’ estimate of the number of brokers left on the scene.
And the feel-good factor was not enhanced last week by the regulator’s announcement that it was increasing fees for those advisers still standing. Although the rise is limited for brokers paying minimum fees and who have insurance permissions, for larger firms and those without insurance permissions the hike is a headache they could well do without.
But before we all commit hara-kiri let’s take heart from the fact that if you are reading this your firm has been stress-tested and come out the other side in one piece, more or less.
Despite the many ways consumers can get mortgage advice now – direct, via a branch, over the telephone or through a price comparison website – most still want to use brokers. Sure, you probably can’t help them for the time being but that does not detract from the fact that brokers perennially drive the housing industry.
Consumers like to use brokers and no matter what lenders, regulators and politicians may feel about it, that’s the way the mortgage market works.
Intermediary numbers may have been culled by the credit crunch but smart firms have found a way to survive. So if politicians and regulators don’t stamp the market out of existence, brokers still have a bright future.