Smaller law firms will be hit badly by the mortgage shake-up that kicks in this week, it has been claimed.
Bulk conveyancer myhomemove predicts that the Mortgage Market Review (MMR) will result in 15% of smaller conveyancers going out of business by the end of next year as lenders tighten up on their panels.
By contrast, it forecasts that the biggest top 100 firms will grow their market share by 35%.
The introduction of MMR on Saturday will mean lenders and brokers having to test borrowers’ mortgage affordability in in-depth, face-to-face interviews in branches that could last up to three hours.
Alongside this, there will be a need for lenders to have greater control over third party relationships and anyone explicitly involved in the mortgage transaction.
Doug Crawford, CEO of myhomemove, said: “Over the past few years, the conveyancing world has gone through a quiet revolution. In 2006, the top 100 conveyancers accounted for only 15% of mover conveyancing transactions, and today this figure has risen to 26%.
“As MMR takes hold, we wouldn’t be surprised to see the conveyancing sector polarise even further, especially as lenders continue to tighten their processes, be more selective on who they lend money to, and run stricter conveyancing panels,
“I think this will be to the point that the top 100 legal firms command 35% of the market. Alongside this, there also seems to be a real concern amongst networks and intermediaries that they too will also have to show a great level of control over who their clients use in the mortgage process.”
He went on: “It is our belief that smaller legal firms will be the first to feel the effects of MMR, especially as they don’t always have the technology and resources needed to meet the banks’ anti-fraud criteria to secure a place on their panels.
“This, coupled with some would-be buyers finding it harder to secure a mortgage, will undoubtedly have a knock-on effect for smaller conveyancers.
“Ultimately, we expect to see the number of firms operating in the conveyancing market decrease by around 15% over the next two years.”
Comments (6)
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I have been in touch with Santander, Lloyds Banking Group and the Building Societies Association and their comments, in no particular order, are:
1. From a panel management perspective there won't be any direct impact from MMR.
2. We are not going to reduce our panel.
3. We don't believe that the MMR will have an impact on conveyancers.
If memory serves, it is possible to outsource the ID verification and fraud checking for less than £20 a person (possibly half that). Certainly I can reference a tenant for about that much.
On that basis, with such a large vested interest as the author, surely this is more of an advertorial than a real news story.
Interesting comment, Anonymous Coward. It is always a difficult call for me as editor – someone making a legitimate point (in this case, about lenders likely to cut back on their panels further, putting smaller legal firms at risk), although it is clearly in their interests to say so. However, I can assure you that this is not an advertorial and that no stories on this site are paid for.