Brokers go for super-size option

Five of the UK’s largest mortgage brokers have clubbed together in what they are stating is a loose coalition designed to give them better bargaining power with lenders.

And while it remains a very distant possibility, the head of the new coalition Andy Pratt, chief executive of Alexander Hall, admits this initial loose association could be the first step towards the creation of a super broker in the future.

Earlier this year a report published by consultants KPMG forecast the larger mortgage brokers night in the future consolidate to form super brokers similar to those which exist in the US. The report also suggested such super brokers would develop their own products, which would be distributed through a massive broker workforce, with loans passed onto lender balance sheets once they had been originated.

Pratt says: "There's always a possibility that will happen but at the moment its purely about getting together under one banner for the five firms involved to negotiate with the lenders."

The five brokers: Alexander Hall, Savills Private Finance, Chase De Vere Mortgage Management, Cobalt Capital and Hamptons International Mortgages believe their consortium, called Concordia, can produce £10bn worth of mortgage business next year.

They also say they have come together in order to give themselves greater powers to negotiate exclusive deals and enhanced procuration fees with mortgage lenders.

Pratt says the consortium of companies will retain their separate identities and will review whether to admit further members over the course of the next 12 months although there are no plans to open up the consortium and the deals it negotiates to directly authorised brokers that do not work for the five firms.

He says one of the main reasons for the formation of Concordia is the fact mortgage clubs, networks and packagers have to some extent since the onset of mortgage regulation received preferential treatment from mortgage lenders because of their ability produce volume. Directly authorised mortgage brokers have, he says, been left out in the cold as a result.

“It’s not so much that we have been getting a bad deal from the lenders, but one of the things since regulation is that aggregators have been looked on more favourably by the lenders because they can produce volume,” he says.

Pratt says the consortium will also provide benefits to lenders as they will be able to negotiate with the consortium instead of each individual broker and that further rationalisation of processes will be realised in the future.

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