There will be more business casualties among broker firms in the next two years the Mortgage Advice Bureau warns.
The independent mortgage brokers says 2005 may have been a tough year, but 2006 will not be any easier and by 2007 the market will be firmly divided into winners and losers. How the market splits will depend on whether brokers realise they need to change in the current tougher climate.
Peter Brodnicki, chief executive of MAB, says the tougher housing market and competitive mainstream mortgage market, together with the time demands and cost of regulation, will continue to make life harder than ever in 2006. By 2007 the additional impact of Home Information Packs will severely test the financial viability of many mortgage advisers if housing transactions fall as predicted.
MAB predicts that only the brokers that offer additional income streams such as personal loans or conveyancing will survive. It also believes that because of the changing dynamics of the income model for brokers, those who charge fees will be the most successful. Analysis of the performance of MAB’s 250 franchise branches shows that the most successful and profitable advisers are those who charge fees
Brodnicki adds: “The industry must evolve to survive. I think many people have underestimated how much the world is going to change – they thought M-Day was the big challenge, but our view is that the next two years are going to be far more demanding. Only those brokers with the foresight to adopt new ways of working will thrive. For individual advisers, this means being careful about which networks or businesses that they choose to work for.”