We must strive to keep brokers afloat

Over the past few weeks the mortgage market has been contracting on what feels like a daily basis. Deals are disappearing at a rate of knots and there are fewer lenders lending.

We’ve calculated that the liquidity crisis and the resulting lending shortfall could wipe up to £625m from brokers’ potential proc fee earnings.

To make matters worse, many of the lenders severely affected by the crisis are those that have the closest ties with brokers.

With fewer opportunities for brokers to do business and a drastic reduction in the availability of products that offer high proc fees, things look rocky.

Brokers will become increasingly reliant on large balance sheet lenders and mainstream product options as the liquidity crisis rages on. If these lenders were committed to brokers this wouldn’t be a problem, but just a couple of weeks ago we heard of another lender that looks like it’s cutting brokers out of the loop.

The issue of client ownership has reared its head once again. In this example it’s thought that a major balance sheet lender has gone back on a verbal agreement to give a broker up to six weeks before deals expire to contact clients. Despite its declaration that it puts brokers at the heart of its work, the lender in question all-egedly reneged on the agreement.

I’ve discussed the topic of client ownership and the threat of lenders’ retention strategies before but in the prevailing market conditions it’s more important than ever to bring this issue to the fore.

In an environment where brokers will become more reliant on large balance sheet lenders’ products, we need to ensure that the strong relationships that have been forged between lenders and brokers aren’t damaged. To find ourselves in a situation when lenders with direct offerings take advantage of the liquidity crisis and leave brokers out of the loop simply to save on proc fees would be a disaster.

Brokers are already faced with a contracting pool of clients and a drop in proc fees. The last thing they need is for lenders to cut them out of remortgage deals.

The industry must protect the interests of brokers. If we see a reduction in their numbers this could limit consumer access to independent mortgage advice and damage clients’ ability to make the right financial decisions. This will benefit no-one.