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Stephen Smith: The MMR could play into intermediaries’ hands

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The future for mortgage intermediaries, and by that I mean the next two to three years, has rarely looked brighter. It is going to be a good few years, with a more active housing market meaning lots of demand for our services and lots of lenders and lending to fulfil our customers’ needs.

Over the last few days, we have been running a series of roadshows and our external lender speakers from top five lenders have all confirmed that their forecasts for gross mortgage lending this year are now well in advance of the CML’s £195bn. They all also stated that the overwhelming majority of this increase is expected to originate in the intermediary sector.

It is entirely possible that we will see a gross lending market of around £220bn this year, with over £140bn of that via intermediaries. More lending overall, more via intermediaries. What’s not to like?

On top of this, the MMR presents intermediaries with the opportunity to show lenders just how good and professional they are by taking this regulatory change in their stride compared with what will doubtless be a somewhat faltering performance by the lenders’ own branch and direct mortgage origination operations.

The MMR has forced huge change on lenders, less so on intermediaries. All mortgage intermediaries are already qualified – many or most lender advisers were not. All mortgage intermediaries undertake fully advised sales and, again, many lender advisers did not. All mortgage intermediaries are used to sales supervision and monitoring – most lender mortgage staff were not. So the scale of change required among lender staff will be immense and put alongside the systems and process changes that lenders have also been putting in place for the MMR, it will be a wonder if it all works smoothly over the next few months.

We have been hearing of significant delays in being able to book a mortgage interview appointment in some lender high street branches – doubtless as a result of key staff being off the road for training, but we do not necessarily think these delay issues will be solved as 26 April comes and goes.

It will not all be plain sailing for intermediaries. The changed requirements and minor alterations to business submission systems that lenders are finally communicating to the market means attention to detail is required. Intermediaries are currently receiving endless lender updates and will need to spend time and trouble on each case until they are familiar with new criteria and systems.

If the year works out the way we think, then at the end of it, I believe mortgage intermediaries will have proved beyond doubt that they represent the most cost-effective and flexible channel for originating  good quality mortgages.

This will present lenders with a dilemma. Do they continue with costly and inflexible branch and call centre operations, dealing with decreasing numbers of customers just wanting advice from one product range, or do they change their strategies to become fully intermediary focused? Time will tell how what lenders decide on this but being a mortgage intermediary has rarely looked so good.

Stephen Smith is director of Mortgage Club and Housing at Legal and General

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