Abstract
Mortgage intermediaries are experiencing a significant period of change, as challenging conditions in the mortgage and housing markets create a new landscape for mortgage distribution. Having generated a significant proportion of new mortgage lending in recent years, intermediaries have seen their share of the market fall sharply over the last 12 months. Many lenders who transacted exclusively through intermediaries have been forced from the market amid a widespread shortage of credit. At the same time, those lenders who remain active in the market have taken steps to control distribution more tightly with some providing more competitive deals via their direct channels.
As intermediary lending contracts, so too has the number of advisers and mortgage advice firms operating in the sector. Mortgage-only and sub-prime specialists have been among the most badly affected sectors of the market, while those with a more diversified approach have been better placed to withstand the drop in mortgage business. This has led to some rethinking of existing business models among some brokers and advisers, while market pressures have also raised the prospect of a more concerted shift towards fee-based rather than commission-based remuneration. Over the next few months the industry is likely to face increased regulatory attention and pressure, as the FSA looks to take a more tightly controlled approach to financial regulation.
This report examines the impact of the credit crisis and wider economic downturn on the mortgage intermediary sector. It presents an overview of the lending market and considers the approach of different players in the market to the difficult conditions. The intermediary marketplace is analysed and the impact of direct and online channels is assessed. Mintel has also conducted exclusive research among mortgage intermediaries, which focuses on business confidence, challenges and priorities and the intermediary/lender relationship.
Key report themes:
- A shortage of credit has seen a major contraction of mortgage lending, creating challenging conditions for mortgage intermediaries.
- Demand for mortgages has also fallen as the UK economy struggles through a recession and consumer confidence remains low.
- The intermediary sector has been badly hit by the loss of several intermediary-only lenders, particularly within the specialist mortgage market.
- Several lenders have restricted their most competitive products to direct channels, further damaging intermediary prospects.
- The number of mortgage advice firms declined by 9% during 2008, as advisers struggled to maintain business levels resulting in cash flow difficulties.
- Online channels present both opportunities and potential challenges for intermediaries.
- The financial crisis has raised the likelihood of additional regulation within the mortgage market, which could have a profound impact on the future of intermediaries.
- However, demand for owner-occupied housing will continue to drive the UK mortgage market in the long term, with many lenders dependent on intermediaries in order to obtain market share.
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