View more on these topics

The golden trail beckons for brokers

In just 298 days time the mortgage market will be regulated. Securing a solid distribution channel will be paramount for success post-N3 – both for brokers and lenders.

The problem for lenders though is that just as business comes in at the front end they invariably lose it at the back end. The remortgage market is booming and, with rates expected to remain low well into next year, it&#39s a market that is expected to grow.

Indeed, the Bank of England&#39s Monetary Policy Committee meets on Wednesday and Thursday this week and could well cut rates by a further 25 basis points. All this is good news for consumers – as well as the economy. Borrowers are enjoying some of the best deals ever. Last week Charcol was offering a five-year fix at 4.99% (95% LTV) with no strings attached through Portman. And today Derbyshire launches a five-year fix at 4.99% (75% LTV). Clients thinking about remortgaging or stepping onto the property ladder for the first time have never had it so good.

For lenders, hanging on to borrowers is becoming more difficult by the day and ways to increase client retention are scarce.

However, trail commission is quietly being mooted by some lenders as the golden chalice that could help shore up their mortgage books and bolster profits. Indeed, Standard Life Bank, Yorkshire Bank and Intelligent Finance are already among those paying introducers trail commission. And Halifax, the UK&#39s largest mortgage lender, is actively considering whether or not to adopt such a system.

Trail commission may be good for lenders&#39 client retention but is it as rosy for brokers?

As Kim North, director of London-based IFA Pretty Financial, says in our trail commission cover feature starting on page 21, “trail commission is good for IFAs because they will have to look after their clients”.

The problem though, she says, is that brokers may be tempted to leave a mortgage with a lender paying trail commission even though it may not be the best deal for the client, rather than remortgage the client and lose an income stream.

It seems the jury is still out on whether trail commission will work for the benefit of both lenders and brokers. What&#39s more certain is that lenders are chasing market share like never before and commission -whether up-front or trail – is on the way up.

Which means that there really hasn&#39t been a been a better time to be a mortgage intermediary.


Estate Agents putting on the pressure

Estate agents are putting commission payments ahead of customer service, research from national accountancy group Hacker Young has revealed. First-time buyers are pressured into buying uncompetitive insurance policies and other products which they could get cheaper elsewhere. A spokesperson for Hacker Young says: “The estate agent may simply promote a product because they are gaining […]

Bookies go for rate bet

City Index, the London spread-betting firm, has introduced a scheme to allow people to hedge their bets on future mortgage rates and the direction of property prices, based on prices from the Land Registry. John Stewart, director of Basildon-based PMI Independent Financial Adviser, says: “It&#39s a bit more predictable than the stock market, but you […]

Housing market tumbles after &#39unsustainable&#39 growth

The world economic slowdown has taken its toll on the &#39unsustainable&#39 growth of the housing market, with prices falling last month for the first time since February. Nationwide said prices dropped by 0.5% in October, but with an average house price of £91,653 they are still 13.1% higher than a year ago. Nationwide&#39s chief economist, […]

Mortgage Brain eyed by five new lenders

Electronic trading platform Mortgage Brain is in discussions with several major lenders with a view to increasing its pool of non-equity members. Coventry, Verso, Platform Home Loans, Furness BS and Marsden BS have been in talks with Mortgage Brain over plans to join the trading platform as non-equity members. Last week, Norwich & Peterborough became […]

Retirement - thumbnail

Pension freedoms: stop the scams

At the beginning of 2015, we highlighted that the new pension freedoms that come fully online on 6 April also represent a very attractive opportunity for the criminal fraternity to scam savers out of some, or all, of their accumulated retirement savings.


News and expert analysis straight to your inbox

Sign up