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More borrowers going to brokers for advice

Your home may be repossessed if you do not keep up repayments on your mortgage.

Almost four out of five (78%) of mortgages have been taken out via brokers this year, rather than directly through a lender, according to mortgage technology supplier IRESS

This has gone up from 56% in 2014 as the intermediary mortgage market is seeing a resurgence in business following on from the introduction of the Mortgage Market Review. This growth has been in part driven through lenders, such as HSBC and Tesco Bank, starting to lend via intermediaries, having been direct-only lenders for many years. The intermediary channel has been most popular with mutual organisations, such as building societies, who sold an average of 82% of mortgages via intermediaries compared to 74% for banks.

Mortgage sales via intermediaries were higher among the smaller lenders at over 90% of sales compared to 65% for the big banks. The intermediary channel has also proved the most effective at progressing mortgage offers to completion. Intermediaries boasted a completion rate of 84%, while the next most effective was via the telephone (81%), followed by branch (76%) and online (58%).

The MMR is still impacting on the time taken to generate a mortgage offer. On average less than half (43%) of mortgage offers are issued in less than 14 days, which is a slight improvement of 1% since 2014. The MMR has caused a divide between different sized lenders. Since 2013, the big banks have seen a 6% increase in the proportion of mortgage cases going to offer with 14 days (59%). The opposite has occurred across small to medium sized lenders, with the percentage of cases going to offer with 14 days dropping by 46% and 12% respectively, to 39% and 32%.

Henry Woodcock, principal mortgage consultant at IRESS, commented: “Many are under the impression that the impacts of the MMR are behind us, but is clearly not the case. With the added complexity, intermediaries are playing a more vital role than ever before and their market share has grown as a result.”

Woodcock also believes 2016 will be another year of change as online technologies develop and the newer, challenger banks enter the market without the constraints of old technology systems.