Are large brokerages pushing out the small ones?

The number of mortgage intermediary firms operating in the market has shrunk from a colossal 3,394 in June 2007 to 1,641 as of March 2011.

The latest figures from the Financial Services Authority show the number of firms operating in the sector has more than halved over three years – but is this necessarily a bad thing?

It’s hard to gauge an accurate assessment of how many mortgage brokers are operating in the sector because the data focuses on firms and not individuals.

The likes of Countrywide will have hundreds of brokers working under just the one firm.

But in many cases a firm might also represent just one broker.

It is not surprising that the number of broker firms has fallen dramatically in line with a drop in gross mortgage lending.

The number of broker fraud charges coming out of the FSA show there are firms the industry is better off without, but for every unscrupulous firm that crumbles, no doubt there is an honest hard-working one that closes as well.

The last few years have seen the large as well as the small players fall by the wayside,but it is hard to know what effect the falling figures are having on the local one man sole trader.

The sector has always been able to maintain a strong directly authorised proposition, as well as one for appointed representatives.

It would be a shame if the mortgage sector started to mirror what has happened in the supermarket sector for example, with only the strong surviving and the small local shops being wiped out.

Robert Sinclair, director of the Association of Mortgage Intermediaries, says the sector is one of swings and roundabouts and while the large firms may have the lion’s share of the market at present it may be different in a couple of years.

But does it really matter where the advice comes from and whether this comes from a larger brokerage or a small one-man band? Both routes have their advantages – a smaller firm will have less overheads and may be able to offer more of a personal service to the customer, whereas a larger firm is likely to have financial backing and better resources at hand.

Let’s hope Sinclair is right and the sector will soon swing back in favour of smaller firms, as both large and small are needed for the sector to survive.