Mortgage Advice Bureau issues profit warning
Derby-based brokerage firm Mortgage Advice Bureau (MAB) has issued a profit warning, blaming the former Chancellor Kwasi Kwarteng’s disastrous mini-Budget in September.
The company said Kwarteng’s announcement created a “significantly heightened level of uncertainty” which had a “direct negative impact” on the mortgage market, with business levels in October and November some 50% below expected levels.
MAB also said it has lost £2.8m after estate agency Boomin was placed into liquidation and its investment was written off.
The firm has also stalled its recruitment programme, with the onboarding of new advisers delayed “until the outlook becomes clearer”.
These factors combined, says MAB, will see the firm’s adjusted profit before tax for 2022 to be slightly below market expectations and that next year’s figures will be “considerably impacted”.
Peter Brodnicki, CEO of MAB, said: “The consequences of the so-called mini-Budget have been quick and far-reaching. Overnight our market moved from being fairly stable and reasonably confident, to almost the polar opposite. The sudden and unexpected pace of mortgage rate increases, combined with the tightening of mortgage lending criteria, have resulted in some customers pausing both home-moving and re-financing plans.
“The recent Autumn Statement and the various Government changes prior to that have helped to stabilise markets. Although macro uncertainty remains for many reasons, we expect mortgage rates to continue to stabilise, allowing some customers to re-enter the home-moving market and also re-finance at more competitive mortgage rates than those seen in recent months.
“Despite the various market and political challenges, MAB remains very well positioned to grow its market share strongly through 2023. In more challenging housing markets although we may see a reduction in organic advisers our new AR recruitment performs strongly, so next year overall adviser numbers could remain flat.
“The re-financing opportunities in 2023 are significant, and with the technology enhancements we have delivered, MAB is in a better position than ever to optimise those opportunities. As expected, protection attachment rates have already started to improve in the current environment, and our focus to ensure that continues has never been greater. As we see in housing downturns, transactions are delayed, they are not lost.”