Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Mortgage Firms Warned Over Reliance on Product Transfer Income

Mortgage brokerages that depend heavily on product transfer (PT) income are being cautioned about significant risks to their business models. Changes in lender behaviour and regulatory updates are creating challenges for firms that have relied on PTs as a stable revenue stream.

The report highlights that product transfers have historically provided a smooth and low-friction source of income for mortgage professionals. However, this reliance has led to complacency within the industry. The article notes that if this revenue stream were reduced or removed, many brokerages could face serious difficulties.

Recent developments include the Financial Conduct Authority’s Policy Statement PS25/11, which could allow lenders greater freedom to engage directly with clients when their mortgage deals are up for review. Additionally, a major lender has recently reduced the procuration fees paid on PTs. These changes suggest that lenders are increasingly seeking to retain clients directly, often through automated portals, rather than paying fees to brokers.

The article argues that these shifts may lead to a more aggressive approach from lenders, aiming to secure client retention without broker involvement. For brokerages, this could mean a significant reduction in PT-related income.

The report suggests that moving towards specialist lending—such as complex buy-to-let, bridging finance, asset management, and commercial structures—could offer a more secure future for brokers. These areas are described as requiring human expertise and advice, which cannot be easily replaced by automated solutions.

For UK letting agents and inventory clerks, these changes in the mortgage market may impact the availability and structure of mortgage products for landlords and property investors. The evolving landscape underscores the importance of staying informed about regulatory and market developments that could affect client financing options.