Edeus is warning that the cre-dit crunch could see up to £625m wiped off the total income potential for mort- gage advisers.
The firm has calculated a 31 per cent deficit in the amount of finance expected to be available to borrowers this year and believes this will result in a dramatic reduction in procuration fees.
Gross mortgage lending totalled £364bn in 2007 but Edeus says 2008’s figure could be as low as £250bn. It bases its income shortfall estimate on the predicted reduction of £114bn in gross lending.
It says the adverse market could see a £26bn lending shortfall in 2008. With proc fees averaging 1 per cent on each case, it says this would result in a reduction in income for advisers of £260m. Edeus estimates that proc fees could fall by £140m on self-cert business and £90m on buy-to-let loans. The mainstream market could see a £135m reduction in proc fees.
Managing director Alan Cleary says: “A mass exodus from the mortgage advice sector is unlikely but there is no doubt that advisers are going to find it tough over the next few months.
“It is vital that advisers begin to consider additional revenue streams to ensure they are able to continue to operate in a commercially viable manner. We are fully aware of the predicament our broker partners face and are working on a key initiative that we hope will be of assistance in the very near future.”
Brentchase Financial Services mortgage specialist Mike Fitzgerald says: “I think it may be justified for lenders to cut proc fees for a while as long as they bring them back up when profits return.”