EBS Building Society's new subsidiary for mortgage lending through brokers aims to capture a 10 per cent market share of the broker channel as other lenders move to squeeze commissions.
Haven Mortgages said yesterday it had inherited a €2 billion loan book built up by EBS since it began advancing mortgages through brokers in 2005 and has a further €1.5 billion in loan applications in the pipeline.
Haven managing director Tony Moroney said he anticipated the mortgage market would bounce next year in line with increased activity in the housing market.
The value of mortgages borrowed by Irish consumers last year fell €34 billion - a drop of 15 per cent. "While the market is down, the level of business is comparable to 2005 levels," he said.
Haven expects that the percentage of mortgage drawdowns that originates from brokers will increase over the next few years.
"Often there is a sense of anti-bank sentiment out there, and the broker removes that," Mr Moroney said. One in two mortgages is currently sourced from a broker, and Haven has a 6 per cent share of the market. It has relationships with 200 of the Republic's 1,800 regulated brokers.
It pays the standard commission of 1 per cent to brokers once the value of their business exceeds a threshold of €5 million.
Other lenders have recently cut their commission rates by as much as 50 per cent and are seeking to introduce clawback clauses on the payments, which Mr Moroney said was "unworkable" for brokers.
EBS had originally intended to set up its broker business as a standalone operation, but legislation governing building societies prevented this. Following a clarification, EBS established the standalone business, which employs 47 people, last December.
