Is the end nigh for proc fees?
The dedicated core of mortgage brokers who offer clients free advice could see their bread and butter vanish all together as two high street lenders announced cuts to their procuration fees last week.
Nationwide and certain branches of Lloyds Banking Group are the first to deal this significant blow to brokers with industry experts expecting other lenders to follow suit.
Nationwide has slashed 0.02 per cent off its proc fees for directly authorised brokers which now stand at 0.33 per cent.
BM Solutions, Lloyds TSB Scotland and Scottish Widow have all undergone changes to its commission structures; BM Solutions will pay all brokers, both directly authorised and appointed representatives, approximately two basis points less following the cuts. The lender however is yet to confirm any details.
Alan Cleary is the Managing Director of Precise Mortgages:
“I would recommend that brokers face the fact that high street lenders are withdrawing from the intermediary market either by design or by incompetence.
“Look at the facts, a mass market move away from interest only often focused on the intermediary market, dual pricing is intensifying and proc fees are being cut.
“The next move will probably be withdrawal of proc fees for certain types of products which will evolve into at least one brave lender abolishing proc fees altogether.”
But while the bell may be tolling on proc fees, brokers can continue to rely on the legal and administration fee from Goldsmith Williams which allows them to earn up to £300 per case and £600 on combined sale and purchase instructions.
Content correct at time of publication