Expect proc fee tiers post MMR

Penn predicted that the relationship between brokers and lenders would improve once MMR is implemented next month but said the quality of applications will be of paramount importance.

He said: “MMR will see clients receive better advice from brokers and a strengthening of the lender/broker relationship.

“We should also see an improvement in the quality of applications submitted to lenders. However, should some brokers not be delivering cases of the quality that lenders anticipate we could see a drop in proc fees for some or a refusal to accept cases at all.”

Penn said that with lenders admin levels set to increase it would make sense to reward brokers who are minimising caseloads.

But he also said proc fees in general could increase. He said: “It only takes one lender to change their proc fees and we could see all the other lenders fall into line.”

Penn added that he anticipates a surge in brokers business volumes following the implementation of MMR.

He said: “Traditionally we have seen a 55-45% split one way or the other between brokers and lenders.

“However with lenders currently finding it difficult to recruit and working on putting staff through CeMap we are likely to see an increase to a 70-30% split in favour of the broker.

“Whilst there will be more admin involved for the broker there is help available. With the average spend of £3,000 for the most up to date software it isn’t costly.”

But that increase may be short lived with Penn anticipating a return to the norm in 2015.

He added: “As lenders get their processes and staff up to speed we should see the market split drop to back to a more traditional 60-40% split.”

The Council of Mortgage lenders latest forecast predicts that the mortgage market will hit £195bn next year and £206bn in 2015.