The Mortgage Advice Bureau has said advice firms in its network will be reducing their headcounts over the next two months due to a drop in house sales and therefore leads.
The lay-offs were announced in a trading update yesterday (January 31) by MAB, amid a slow down in mortgage lending and property transactions.
In December, mortgage approvals fell for a fourth consecutive month, reaching their lowest level seen since May 2020, during the first lockdown.
This trend is expected to continue into 2023, with gross new mortgage lending set to fall 15 per cent, according to UK Finance.
As a result, MAB said yesterday: "We expect to see a fall in adviser numbers in our current ARs [appointed representatives] during Q1 2023 as firms reduce their headcount in line with expected H1 2023 purchase activity.
"Lower lead levels result in a tightening of adviser numbers and an increased focus on maximising opportunities and productivity."
Last year, the mortgage advice network spent £73mn on a majority stake in broker Fluent money to boost new business leads.
At the time, MAB’s chief executive Peter Brodnicki said the deal would "be transformational for MAB's national lead generation strategy".
Fluent sources leads either through its own channels - which include a telephone-based adviser service - or through third party aggregators which it passes on to its advisers.
The investment saw Fluent add £22mn in revenue to MAB's total £230mm revenue for last year, a 22 per cent increase on the previous year.
During 2022, MAB also grew its adviser network by 20 per cent, from 1,885 to 2,254. This included 182 advisers at Fluent following MAB's investment.
It is unclear how many advisers MAB expects to shed through its AR firms between January and March this year. The network oversees some 200 firms.
In its trading update, the network said: "Following a leap in mortgage interest rates, the withdrawal of many mortgage products and a rapid tightening in lenders' underwriting criteria, Q4 saw significantly reduced house purchase and re-financing activity.
"Buy-to-let activity was also significantly impacted. As a result of the sharp slowdown in all mortgage activity, most of our AR firms suspended adviser recruitment and reassessed their staffing requirements for 2023.
"This has resulted in cutbacks in advisers by some firms, particularly due to the significant short-term fall in purchase transactions requiring a mortgage."
The network does, however, expect adviser numbers in its current ARs to stabilise in the second quarter of 2023, before "build[ing] gradually" in the second half as business volumes improve.
While current AR firms are expected to shed individual advisers, MAB said postponed activity in the market will see new AR firms join the network in the medium term to cut costs.
"We expect recruitment of new AR firms to be boosted by the quieter market and the tightening regulatory environment," the network said.
In its latest results, Brodnicki said the technology the network has developed to help AR firms optimise lead flow from existing lead sources and clients will help support a recovery in the second half of 2023.
