Legal & General’s director of housing and external affairs, Stephen Smith, made the claim in a seminar at Wednesday’s Mortgage Business Expo. He said based on an average proc fee of £483 and the average time spent completing an application at 11 hours, brokers were getting just £43.90 an hour.
“Before lenders start thinking about cutting their proc fees, I would urge them to compare the hourly cost of completing a mortgage in their branches with this,” said Smith. “They also need to think about the income a broker needs to maintain a solvent business.”
Smith said intermediaries were needed by the market and had a future, a fact he said was emphatically supported by the Financial Services Authority and the Council of Mortgage Lenders.
“Consumers know best what they want. I don’t think lenders have had a better opportunity than the past two years to reshape distribution and the fact that they haven’t is testament to the value consumers place on advice,” he added.
But he said lenders ran the risk of pricing out the smaller players.
“One day lenders will want to increase their volumes and they need to maintain a vibrant intermediary marketplace in the meantime.”
