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Retention success slashing value of mortgage market

Edeus managing director Alan Cleary says 125bn could be wiped off the value of the mortgage market due to the growth of retention schemes.

At Money Marketing Live in Manchester on Tuesday, Cleary said the market could shrink from projections of around 345bn for this year to just 220bn in future as he claims lenders’ retention strategies are designed to kill off the remortgage market.

He says one lender has already wiped 10bn off the remortgage market because of its retention strategies.

Cleary claims a fairer way to keep customers, rather than paying a full proc fee, is to offer the same deals to new and existing clients.

His latest comments come a week after he said retention schemes were beckoning brokers into a “web of sin”.

Cleary said: “Since retention strategies have come in, 10bn has been wiped off the remortgage market by one lender. Some estimates say we will have a 345bn market this year but it will be 220bn soon. What will the 25,000 mortgage brokers do then?

“The way to fix the problem is to equal the value of the front and back of the book by pricing like Nationwide has done.”

Society of Mortgage Professionals chief executive Richard Fox said: “If retention is good for the lender then someone is suffering and it is probably the client.”

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