Mortgage regulation ‘costing £123 million per annum’

Ramesh Sharma

June 1, 2004

The mortgage benchmarking study revealed costs have risen by £123 million across the sector, reversing the improvements made by lenders in 2004. According to the research the cost of processing mortgage applications increased from £89.67 per case in 2004 to £146.49 in 2005 – a rise of 69 per cent.

Lenders are processing fewer applications per consultant this year with productivity dropping from 1.7 completions a day to 1.18 per day, although time taken to process applications improved in 2005 to an average of 14 days for new business from 16 in 2004.

There has also been a change in the way lenders differentiate themselves through cost and quality compared to 2004. More lenders now fall into low quality segments and half of those sampled now fall into high-cost sectors, compared with 29 per cent in 2004, suggesting that some are struggling with the impact of regulation.

Although lenders still receive 67 per cent of intermediary business in paper format, two-thirds now provide online KFIs reflecting the industry’s increased use of technology.

David Edwards, managing director of Marlborough Stirling’s mortgage business, said: “Many lenders have found it difficult to reconcile the needs of ‘Mortgage Day’ with maintaining low-cost, high-quality services. For those that survive the challenges, 2006’s study will highlight how effectively they have managed to tackle them.”

Michael Coogan, director-general of the Council of Mortgage Lenders, said: “The benchmarking study identifies many of the challenges facing lenders in the post-regulation environment and overcoming these is the key to remaining competitive.”

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