edeus is warning the current liquidity crisis could lead to £625m being wiped off the total procuration fee revenue for the UK mortgage market.
Managing director Alan Cleary says there could be a 30 per cent deficit in the amount of finance available to borrowers in 2008, leading to a subsequent fall in payable proc fees, and is urging mortgage advisers to consider additional revenue streams.
He says the figure was calculated following an assessment of lender and product withdrawals across the sector.
The Council of Mortgage Lenders says total gross lending for 2007 was £364bn but due to low investor appetite for mortgage backed securities and the impact on lenders, edeus says gross mortgage lending in 2008 could be as low as £250bn.
Cleary says: “Although a mass exodus from the mortgage advice sector is unlikely, there is no doubt that advisers are going to find it tough over the next few months.
“The on-going liquidity crisis has led mortgage providers to dramatically scale back lending targets and as such gross lending could be down by as much as £114bn. As a result there will be less procuration fees to go around, and many advisers will struggle to earn as much as they have done in previous years.”
Cleary says it is likely to be 2009 before the market returns to any degree of normality.
He says: “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 as such we are currently working on a key initiative that we hope will be of assistance in the very near future.”