Posos could cut proc fees

The launch of instant offers in the sub-prime market could signal a reduction in proc fees for brokers, according to Openwork mortgage proposition director Paul Shearman.

He believes the fact that brokers will have their work cut less with such technology means that lenders may start offering reduced fees.

Some commentators have recently slammed the high fees earned by sub-prime intermediaries, with an article in one national newspaper recently labelling such brokers “Ferrari kings” because of their earning potential.

GMAC and Edeus have both launched instant offers, with BM Solutions likely to follow suit later this year.

Shearman believes proc fees for self-cert and buy-to-let business may increase because of the increasing number of lenders entering the market desperate to tempt brokers.

He says: “The degree to which sub-prime rates are sustainable is debatable because of technology and the amount of time it takes to be able to arrange a sub-prime deal because of Poso coming in. There was more work involved in the past so there was for more justification for higher fees but not anymore.

“Proc fees are likely to go up in the specialist market as there are a greater number of players in BTL and self-cert. The overall view for prime is that fees will stay as they are.”

London & Country head of communications David Hollingworth says: “We see 2 or 3 per cent figures in addition to a proc fee on sub-prime and those are steep figures and need to be reduced.”