Are intermediaries back in fashion, asks Phil Whitehouse, head of The Mortgage Alliance (TMA)
Since the early 1990s the intermediary market has evolved at a rapid rate. In spite of many hurdles they have been forced to overcome, such as consumer perception, regulation and dual pricing, brokers continue to fight their corner with great heart. It’s true that the credit crunch and resultant funding issues has knocked the wind out of the intermediary markets sails but there are many firms who have regrouped and are now really starting to fight back.
Looking at the lender perspective, attitudes to risk have had to change. They have had to come to terms with market conditions and how funding issues continue to impact on their business models and plans for the rest of 2009 and beyond. Although it has to be said that some have coped better than others caution is still evident and increasingly widespread in the marketplace as many lenders have had to cut back on marketing, exclusive products and streamlined elements of their business. This has resulted in widespread broker frustration but after a dearth of available products and deals to the majority of brokers and consumers – especially first time buyers – in the UK, there is evidence that this is slowly improving.
Indeed, recent back-to-back data from two of the largest sourcing and client management systems Mortgage Brain and TrigoldCrystal suggests that we might just be turning a small corner as they both report that activity and the number of mortgage products available to brokers have both risen.
Data released by Mortgage Brain suggests that the total number of live mortgage products listed on its sourcing system rose by 15% in September, from 2,505 to 2,868 climbing to its highest level since May. It adds that trackers witnessed the biggest increase during the last month, climbing by 32% to 666 products. Fixed-rate deals rose by 14% to 1,804, while variable rate products dropped for the first time in four months by 4% to 398.
Another positive reported was that the number of mainstream lender products with a LTV of 70% or more increased by 8% over the last month. Mainstream buy-to-let products also fared extremely well with an increase in product numbers of 20%. The 258 sub-prime products account for less than 1% of all products available.
Statistics from TrigoldCrystal shows that broker activity increased 11% during September while it agreed that the number of broker products available also rose from August’s lows.
It reported that the number of mortgage sources performed by brokers, a key indicator of broker activity, went from 545,337 in August to 606,496 last month. TrigoldCrystal’s latest product index also shows that 84 more products were available to brokers during September, bringing the total number of broker products to 2,063. This is an increase of 4% from the record low of 1,979 broker products on offer in August, the lowest level for seven years. However, direct products also rose by 4% in September, going from 1,179 to 1,223.
So whilst the signs are promising there is obviously still some way to go and when comparing product numbers of only two years or even a year ago it is easy to see just how much the intermediary market has contracted. There will continue be some seasonal ups and downs to endure and with Christmas in the not too distant future it is important not to get too carried away. However, these are positive signs and whilst the feel good factor is some way off yet the signs are good.
The intermediary market remains a very important one for consumers and lenders alike now and in the future and there is renewed hope that lenders are now beginning to look favorably upon brokers and distribution channels once more.