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Brokers must take charge to win high street battle

Brokers have been warned they could lose the war with high street lenders over market share if they fail to take advantage of the number of people seeking mortgage advice.

The Association of Mortgage Intermediaries and Legal & General  Mortgage Club commissioned You­Gov to carry out research among 2,113 adults about their mortgage buying habits.

Representative to the UK population, the results show 3.4 million people plan to secure a new mortgage in the next year and 1.6 million will be looking to remortgage, with 1.1 million worried their credit history might hinder their application.

But while 81% of borrowers would prefer to make just one attempt at securing a mortgage as opposed to trawling the high street, only 44% plan to see a broker.

The research also shows 8% of borrowers have credit history issues, such as a County Court Judgement or Individual Voluntary Arrangement.

Alan Cleary, managing director of Precise Mortgages, says: “Most people are going to their banks because of the relationships they have with them.

“Brokers are going to lose the war to the high street if they are not more proactive about calling up clients and building relationships.

“If a customer visits six lenders they would probably need to take time off work so it makes sense they would just want to go to one place ­ a broker.”

He also believes the number of borrowers with some form of credit issue could be higher than YouGov predicted.

He says: “People do not like admitting they have credit problems, so we estimate the true figure would be around 12%.”

A recent near-prime poll by Mortgage Strategy showed that the majority of brokers have not placed a single near-prime case in over six months, despite having a large number of credit-impaired customers on their books.

Robert Sinclair, director of AMI, says many borrowers want to receive whole-of-market ad­vice but many consumers are unaware what services brokers offer.

He says: “Brokers need to educate consumers and be proactive if they are to turn this latent demand into business. The mortgage market isn’t going to spring back to pre-downturn levels so it’s up to brokers to make the most of opportunities out there.”

AMI and L&G have gone on the media offensive with the research and spoken to national newspapers in the hope of publicising the advantages of using brokers.

AMI wanted to launch a national advertising campaign incorporating newspaper and television advertisements to promote the ad­vice brokers can offer. But Sinclair says with an overall cost of between£2m and £5m lenders were unwilling to fund it.

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  • Michael White 13th June 2011 at 1:41 pm

    I would argue that established mortgage advisers/IFAs are not going to lose much of their current client database to an online alternative and there will always be a proportion of new business individuals who will require ‘tactile’ attention. But I firmly predict within the next 3-5 years the whole mortgage advice landscape will be transformed to far greater use of online models.

    Simple facts are that many intermediary firms are in unchartered territory having been established during the ‘nice decade’ and built successfully throughout the housing boom. Those days are well and truly over and a new way of thinking and working is required.

    A colleague of mine recently commented that with regards to business ‘all bets are off’. What he meant is that those ‘non-negotiables’ of the past; be they relationships, ideas or ways of conducting business, are no longer set in stone. Activities that we would have thought impossible or impractical just a short time ago are now firmly on the agenda and certainly need to be in order to address the issues raised by AMI.

  • gerry 13th June 2011 at 10:25 am

    Bad day for the industry chaps when someone like Allan Cleary is preaching to you.

  • AA 13th June 2011 at 10:03 am

    I think the figures above a little unfair.

    Brokers will continue to dominate the mortgage market as advice is needed more than ever.

    Consumers are aware of this and are either saving for a deposit or waiting for lenders to break the 95%LTV bracket. Come on Northern Rock, move up to 95%.

  • Martin Tapper 13th June 2011 at 9:36 am

    There is a huge amount that brokers can and should be doing to promote the business without spending vast budgets on unmeasurable results.

    First Get a basic web-site for referencing.
    Second Get up to speed with social networking.
    Third Start physical networking
    Fourth. If you have a good story to tell get up to speed with your own PR machine and tell the press.
    Basically brokers have to stop sitting on their arses and need to put the effort if they want control. The broker story is pretty effective in comparison with banks/lenders, so we have to start promoting ourselves. It need not cost a fortune.