L&G says MMR driving intermediary business

The Mortgage Market Review is the main driver behind the 4 per cent increase in the intermediated share of lending, the Legal and General network has said.

According to the Council of Mortgage Lenders, intermediary market share has increased from 53.5 per cent in the first quarter of 2013 to 57.5 per cent in the second quarter of 2013.

Due to the MMR, the majority of consumers will have to seek advice when they get a mortgage.

Article continues after advert

Those who are exempt from this include those who have a minimum income threshold of £300,000.

L&G stated with the regulations making advice a requirement of the vast majority of mortgage sales many lenders may feel the cost of providing sales in branches, via the telephone and on-going supervision and management of staff responsible for these advised sales, is likely to become prohibitive.

As a result the direct channel will become less cost-effective and many are likely to turn to intermediaries to pick up the slack.

L&G believes the CML’s figures bear this out suggesting the shift may already be underway.

Stephen Smith, director for housing and external affairs at the Legal and General network, said: “We are seeing very clear indications that lenders are starting to favour intermediary distribution channels.

“Although you could point to capacity constraints as a reason for this shift we believe that MMR is a significant factor.

“The real impact will be made clear in the first quarter and second quarter next year as lenders deliver their new capabilities but the recent spike highlighted by the CML is unlikely to abate as the new rules make the role of advisers more central to supporting lenders and borrowers alike.”