Alex Murray, group director of mortgages at Thinc Destini, said the move by Halifax could prompt a flurry of activity in the market resulting in a procuration fee war, in which lenders aggressively vie for market share.
He said: “Traditionally, the retention fee offered by lenders is less than the original procuration fee offered on new mortgage or remortgage business. However, Halifax’s decision to pay the same rate for its retention and procuration fees may force other lenders to go on the offensive and increase their procuration fees in a bid to get more new and remortgage business, creating a procuration fee war in the mortgage industry.”
Murray added that lenders in the securitisation sector may not want to pay a retention fee to brokers as they were less interested in retaining clients, but instead would probably look at increasing the fees paid on all new and remortgaged business.
However, Bob Sturges, director of communications at Money Partners, said: “Retaining customers is important to all lenders, including those, like Money Partners, who securitise. We earn valuable income from our securitised transactions, but can only continue to do so if they maintain critical mass in terms of asset size. With regards to retention fees, it is our view that the intermediary is the principal custodian of the ongoing client relationship. We believe this works in the best interests of ‘Treating Customers Fairly’ (TCF) while also strengthening intermediary partnerships. We are, therefore, also of the view that lenders who rely on mortgage intermediaries for their business distribution should reward them appropriately for repeat or retained business.”
