Credit crunch drains influence from intermediaries

Tuesday, 03, Jun 2008 09:49

The influence of mortgage intermediaries in the UK property market is waning, with lenders reasserting their role, according to new research from Datamonitor.

As the ongoing liquidity crisis sees lenders reassess their product portfolios and causes specialist products to disappear from the market, so the role of intermediaries is reduced.

Datamonitor points to the removal of buy-to-let and self-certification mortgages as two specialist areas which have been ravaged by the credit crunch in recent months, and with fewer such products available, there is less demand for advisors.

"Intermediaries are definitely facing tough challenges in current market conditions, and we are likely to see an increase in number of exits and more consolidation," commented Karina Purang, financial services analyst at Datamonitor.

As a result, the business information company now predicts intermediaries will slightly lose market share over 2008, falling to account for 63 per cent of gross lending, compared to 65 per cent in 2007.

With less funding available, lenders are repositioning their products and re-assessing their risk

As a result, products are being withdrawn and customers are increasingly being turned down. This has created a very challenging environment for intermediaries where their priority now is securing mortgages for customers rather than trying to negotiate better lending terms and proc fees.

With limited supply and relatively strong demand, the market is seeing a shift in the balance of power from networks to lenders.

The Datamonitor intermediary survey finds: "Lenders pulling away from broker distribution' is the main concern for intermediaries, at 53 per cent of responses.

"However, in Datamonitor's opinion, this shift is unlikely to have a major impact on indirect distribution and the intermediary channel will continue to remain the major channel of distribution in the UK mortgage market.

"The second major concern for the intermediaries surveyed was falling commissions, with 50 per cent of participants stating they were concerned about this issue.2

Chris O'Toole