Experts warn that dwindling broker numbers could lead to thousands of orphaned clients if gross lending increases as sharply as predicted.
The Association of Mortgage Intermediaries says the number of brokers has fallen from around 30,000 in 2006 to around 10,000 today. AMI’s estimates suggest the number of IFAs who write occasional mortgage business has fallen from 5,000 to around 4,000 and lenders’ advisers have fallen by around the same amount.
At the same time, lending is forecast to pick up considerably over the next year, due in part to the Government’s Funding for Lending scheme and Help to Buy. Gross lending bottomed off at around £135bn in 2010, recovering to £142bn last year. The Council of Mortgage Lenders predicts lending of £156bn this year.
LSL director of mortgage services David Copland says there will be a lot of people who are now coming to the end of their mortgage term but cannot go back to their original broker, because the firm has gone out of business.
He says: “Some estimates say there are about a third of the brokers there were a few years ago. So there are an awful lot of orphaned clients out there that will have come to the end of the term of their mortgage and their broker would have gone out of business.”
Copland adds this will become problematic when the Mortgage Market Review comes into force in April, as the ban on non-advised sales will mean customer without a broker will have to go through the advised process with individual lenders many times.
He says: “It means customers will have to go directly to the lender. This is all very well at the moment but post MMR this will be a tough task if customers want to shop around then you have to go through the advice process many times. You’ll basically have an awful lot of people who will want advice but there will not be enough brokers to give that advice.”
John Charcol senior technical manager Ray Boulger says: “If you have a combination of a sharp increase in lending over a short period of time, coupled with more business going to brokers [because of the non-advised sales ban], then it could well put the broker system under pressure.”
But AMI chief executive Rob Sinclair believes brokers numbers have not yet reached crisis point, although he says demand could outstrip supply if lending goes past £200bn.
He says: “I still think there is enough capacity to cope at the moment. There is a point where if we got back above £200bn we would begin to see things stretched.”