How big is MAB in the mortgage and protection market?
MAB is one of the UK’s leading mortgage brokerages and has around 500 brokers nationally. We work closely with estate agents and have relationships with more than 800 branches.
MAB strives to provide all the support its estate agent partners need to feel confident their broker is able to do the best job possible. We provide a genuine ‘whole of market’ proposition for mortgage advice, but we place great emphasis on providing a complete offering and protection products represent over 50% of our brokers’ turnover.
Which areas are you seeing the strongest activity in at the moment and why do you think this is?
Currently, the two standout areas are buy to let and remortgages are showing some growth – although from a low base.
The general mortgage market is, broadly speaking, flat but both lender and investor appetite for buy to let is strong. The impact of the economic situation on consumers and lenders has seen buyers squeezed, but buy to let is counter-cyclical and plenty of properties traditionally associated with first-time buyers are being bought by investors, particularly properties for young professionals.
As the same time we have seen an increase in remortgage activity, with borrowers taking action after some lenders began increasing their SVRs. Our most recent figures suggest that remortgages are at their highest level this year, and the highest since last September. In fact the average loan to value has fallen noticeably in the last month. This suggests that a new group of people are becoming worried about rate rises and are deciding to remortgage. These are people who have sizeable deposits and it is likely to be a reaction to rising rates.
What advice would you offer to estate agents at the moment?
The key thing is to make sure all financial services opportunities are being fully leveraged; make sure all ancillary revenue streams are working as hard as possible. So this means mortgages, protection and insurances, wills, trusts, conveyancing etc. Even if the estate agent is working with third parties already they need to ensure that all opportunities are being explored. They are all potential fee generating streams so they need to be monitored just like the other areas of their business. If the agent is working with a third party, just what returns are they bringing in?
MAB works on a basic ratio of 2:1 for the average number of sales agreed vs. the number of new mortgages agreed. The broker may already be dealing with clients who are already on the books, so this figure is not a reflection of the number of sales passed on to the broker. However, it’s a decent indication of potential returns. If an estate agent finds this number is significantly lower than this then it needs to look at its relationships carefully.
So what should firms be asking of their existing mortgage broker relationships?
The key thing for estate agents is to look at how much business they are seeing from their broker, but they should also be looking at whether the broker has access to and sell effectively in all areas. If you are not seeing as much mortgage business as you think you should be then is your mortgage broker doing everything they could be? For example, does your broker charge client fees and do they offer advice on direct to consumer products, are they able to access the new build and or affordable housing markets etc?
In the age of blackberries, ipads and 24/7 communication, how do you communicate with your broker? Do they keep you appraised of how cases are progressing and do you receive the benefits on a regular basis?
MAB reported a record pre-tax profit of £1.9m for 2011, why were your profits so high?
For the last three years MAB’s profits have been increasing year on year. This is due to improved adviser performance and strong year-on-year increases in adviser numbers. We are a well run business that invests heavily in training and development of advisers. But we also look to invest wisely and are also cost-conscious.
In this market the only way to remain profitable is to always look to improve and do better, so are brokers charging the appropriate level of fees, are they identifying and advising on the appropriate ancillary products, and are they keeping in touch with their hard won clients? It costs a lot more money to find a new client than it does to keep an existing one.
What do you think is the main threat to the intermediary market at the moment?
A lot of the threats are self- inflicted and some intermediary firms need to look to improve in terms of advisers and business quality.
However, threats from the real world are an undeniable factor too. The macro-economic situation is highly unstable and the impact on cross-border banking is constraining the appetite to lend of UK lenders. At the same time, consumer sentiment has changed.
Five-years ago property was seen by many as a one way bet, but now while landlord investors are looking at long-term property ownership for the potential gains that it can offer, most people are just thinking about buying a home to live in. This has changed people’s outlook and their expectations and we need to evolve to keep in step.
