Brokers plan launch of own-branded mortgages

Is this for real or is it more likely a shot across the bows of the lending institutions that are squeezing brokers commission?

Fact finding trip to the States would be a good idea for the brokers representatives ASAP. The facts are the banks are pulling mortgage offers in house for the time being and most of the mortgage brokers business are going to be wiped out, by the time crash this is over there will be a fraction of brokers left and those that survive as MortgageBroker intimated will have a different business model.

its real alright, if you hav nearly 60% of the distribution why would you not have product? it doesn’t make sense otherwise does it? tesco have their own brand products and they don’t control 60% of anything, every retailer - and mortgage brokers are retail finance - with even a marginal market share creates their own brands, its time brokers did the same, and the negotiations have started, it probably won’t happen in 2008 but it won’t take too long. GreenBear was right about looking to the USA because even though things there are going crazy the broker market is changing rapidly to find its place in the ‘new world’ which is what everybody in finance is calling anything from 2008 onwards.

Where exactly are they going to get the money?

we don’t need the money for the initial part, because that will be ‘white labelled loans’ which means we design and distribute the product but it is underwritten by a bank, so it will be packaging their money in a Broker designed box, down the line as credit markets recover it might be possible to actually secure funding and create a mortgage broker bank.

one thing is for certain, there is no future in brokerage hoping that banks will be on our side, we need to use our distribution to our best advantage and create products that the banks have been resisting for years.

So do brokers believe that they will get more money be rebranding a banks loan rather than reselling the loan? Is the broker taking on the default risk or something?

I don’t understand the difference if the money is still coming from a bank.

The harsh reality is that in the long term the mortgage broker industry has to adapt or die.
This looks like an initial attempt at adapting, but until the mortgage brokers actual become a bank themselves they will always be at the mercy of the banks, except during boom times.

Because you’re a broker.

Tesco is not in the business of surveying the market and helping people to find the most suitable groceries. There’s no suggestion of unbiased independant advice from Tesco. "Mrs Murphy, we note you buy a lot of Orange Juice, in our opinion the Superquinn 2 for 1 offer would be the most suitable this month.

There are two possibilities. The mortgages are backed by your own money, in which case you are no longer a broker, you are a lender competing with the banks.

Or these mortgages are bank mortgages being resold by brokers (i.e. basically what happens at the moment).

This seems to be more about brokers realising that the broker business is dying and an attempt to create a new business (i.e. move into the lending market). It seems like a crazy time to be trying to get started in that line of work.

Can you explain how brokers will be able to sell these own brand mortgages any more cheaply than the mortgages they currently sell. Will the consumer benefit at all in this? Or is the consumer even a factor?

Wouldn’t a bank pay an even smaller margin to a reseller if their mortgages are rebranded since they lose the benefit of having their brand attached to the mortgage?


Best of luck to you Mortgagebroker, but the Banks and the regulators will do all in their power to impede your plan. This idea reminds me of the Jusen that were set up in Japan, unregulated finance houses, set up to carry out lending that the banks thought was too risky, was really the final nail in the coffin for the Japanese property market … 5001525025

With all the talk of the death of the broker, i have to say back in 2003 i found my experience of using IFG very positive.

They found me a great deal and were able to highlight avenues i was not aware of. My mortgage is with IIB and AFAIK, they have no high street shops so without the broker, i would probably be pushed towards my personal bank.

I find IIB excellent as was recommended by IFG.

If i was to go looking for another mortgage, my first port of call would be the broker, and i would be willing to pay a fee for that advice


I thought you are a broker (i.e “advisory staff” to use your own term), not a retailer?

Some very valid points and I will answer each of them

I don’t believe the brokerage industry will ‘die’ any more than Japanese estate agents ‘died’ death would mean getting wiped out, I certainly envisage lots of job losses and many of us having to close down. That’s the reality of the biggest financial mess since the great depression, I accept that and the issues that come with it, my response though is not to sit back and hope everything is o.k. it will be to eventually create a broker bank, the starting point is branded products.

Funny you reply with a tesco response because tesco actually do compare to other supermarkets, they do price comparisons on their shelves etc. Independent doesn’t mean that you can’t have an ‘own label’ product, one doesn’t preclude the other. Because the market will change, and how we don’t know but it looks like Fees will become the standard, then the idea of an Broker Product has a place, we come up with ideas that banks don’t consider, now its just a case of leveraging our distribution ability into forcing new options. If we become a lender then better again, but we would be a broker owned broker only lender.

The proposition may not be 100% about price, just as there is only one ‘best rate on the market’ and not everybody has it, we are not going to look for undercutting every single bank because that would be ludicrous, equally you don’t have that in any retail sector, Coca Cola doesn’t try to undercut TK, at the same time that doesn’t stop Dunnes from having their own brand of coke. Brokers have certain advantages the same way the direct channel has theirs and we need to plug these into products.

The consumer is the be all and end all, without them brokerage would not exist, there is an inherent lack of choice in direct channels and that’s why we are exist. If we can get close to offers with no added value then a value added proposition would be a solution. For instance-being able to log in online and make an extra payment via online banking, or having access to a financial information website where you can enter your own information and get ideas for budgeting or other money based information, it would help to create financially literate clients, not that people are financially illiterate but as a nation we don’t teach money in our schools, we could also add on incentives that loans done via this route then get you discounts on other broker products, the pervading truth for brokerage is we can’t sit around hoping anybody other than ourselves will try to save our industry.

regarding ‘brand’, underneath its all about money and money has very few brands, there is the ‘brand’ of the Euro, Pound, and Dollar, outside of that its about profit, for brokers its about having some degree of control over our future and where the market is moving, regarding profits from loans, the commission idea needs to be totally re-thought out, banks work on gap maturity we don’t, perhaps that’s the model we should follow.

nonbeliever: we’ll likely have many obstacles, both structural and legal but it doesn’t mean our ideas won’t come to fruition, survival is a strong motivator!

Idij: the area of finance we are in is the ‘retail’ channel, because we advise on retail products, granted there are commercial brokerages and they advise other firms and investment houses etc. for instance Oppenhiem would advise institutions etc.

Anyways, its early days, but the rationale we are taking is that we will engage banks that are not in the market, and some that are, brokerage is down but we are not out.

Sunday Business Show: 10.30-11.30 on Today FM, if you wanna grill me you can do it on air! i’ll be there talking about Broker Branded products.

I don’t think a bank could care less what brokers wanted.

Pat the baker: your right, they don’t care, but they do care about profit and we can deliver that to the lender who comes on board with brokerage, if lenders had their way we would cease to exist,
if lenders had their way you would also pay a margin of 5% above ECB etc. So thankfully what banks do and don’t care about doesn’t always matter.

If you’re selling your own product do you not become a tied agent then? Surely you’re going to be pushing people towards your offer, as opposed to AIBs, say?

Fair enough!
So you have to essentially negotiate a better deal for yourselves at the banks expense and at the same time still make it worth their while to keep lending you money.

supermarket own brand aims to cut out the middle man and basically sell a commodity such as orange juice or coffee at a reduced price to similar branded products such as tropicana or nescafe. There are also savings made in packaging and advertising/ merchandising costs.

The proposal to have own label mortgages falls down on the fact that you do not intend to cut out the middle man you are trying to prop him up. There may be savings in advertising. There will be no savings in administration as you will have up to a thousand brokerages duplicating the same business structures. Essentially you are adding a layer of cost at a time when banks are removing a layer of cost. Who will be most competitive at the end of the process… David or Goliath??

the banks pass their pain onto brokers, all we want to do is create products that are client friendly, transparent (eg: loan offers that are not in legaleese) and eventually have our own processing, that way the only cost to the bank is providing the money, they will make a premium for their risk, we reduce expensive margin and provide distribution on the best loans, everybody wins. I think that the entrepreneurial approach of brokerage versus the institutional backdrop of banks mean that we will be able to innovate better and profit from doing that.