Mortgage brokers are missing out on more than £35m in procurement fees each year due to a lack of research beyond the top ten high street lenders, research has shown.
Mortgage Broker Tools, a research platform for mortgage advisers, found brokers are missing out on placing 3,712 cases a month “because they rarely use an affordability calculator from a non-top ten lender”.
Typically, larger lenders will have stricter affordability criteria for mortgage applicants, whereas smaller, more specialist lenders are designed to cater for more targeted demographics of borrowers.
Using an average loan size of £200,000 and an average procurement fee of 0.4 per cent, MBT worked out that 44,544 cases missed over a year equated to £35.6m in procurement fees which are also missed.
“Old habits are costing brokers money,” said MBT’s chief executive, Tanya Toumadj.
“We know that nearly six in ten brokers rarely look outside of the top ten when it comes to identifying a lender that can meet their clients’ loan size requirements.
“Yet one in ten cases don’t have an appropriate affordability match from the top ten lenders.”
Whilst Toumadj accepts “these may seem like small percentages at first”, he said “they add up to big numbers in lost revenue”.
MBT has also found the percentage of enquiries considered to be affordable has dropped from 80 per cent in January 2021 to just 73 per cent in August.
With affordability on the decline, Toumadj has urged buyers and brokers not to “lose hope”.
“Our data also shows more than a fifth of these cases that are considered unaffordable are less than 5 per cent away from there being a suitable affordable option.
“So, there are opportunities for many borrowers to secure the loan they need, as long as they work with the best lender for their circumstances.”