As new mortgage lending figures continue to contract at a worrying rate and brokers find themselves relying more and more on alternative ways to supplement their income, the Association of Mortgage Intermediaries (AMI) has estimated that around 40% will soon exit the market.
The news has come a mere number of days before the 20,000 financial advisers across the UK will have to spend thousands of pounds to renew their FSA permissions for the year ahead.
Regulatory fees are due at the end of this month but the AMI has already predicted that many of its members will simply shut up shop rather than struggle on through the economic slump.
The director of the AMI, Robert Sinclair, stated: “We estimated that around 40% of brokers would leave the market [this year]. We had 769 firms leave in the fourth quarter last year and always knew this quarter would be the worst, with some firms not wanting to pay their fees.”
Andrew Montlake, associate partner at Cobalt Capital, the Knightsbridge-based brokerage that ceased trading last week, agreed that the financial downturn is severely affecting brokers: “The conditions are dire in the market. The main problem is the demand is there from clients but there is no supply of mortgages, which is why brokers are having issues.” He said.
According to the Council of Mortgage Lenders, new mortgage lending shrank by 52.1% between January 2008 and January of this year.
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