REG - Mortgage Adv. Bureau - Trading Update

Mortgage Advice Bureau (Holdings)Announcement

26/07/2023 07:00

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RNS Number : 1758H  Mortgage Advice Bureau (Hldgs) PLC  26 July 2023

26 July 2023

Mortgage Advice Bureau (Holdings) plc

("MAB" or the "Group")

Trading Update

Mortgage Advice Bureau (Holdings) plc (AIM: MAB1) today issues a trading
update for the six months ended 30 June 2023, ahead of publishing its interim
results on 26 September 2023.

Group revenue for the six months ended 30 June 2023 was up 21% to £116m (H1
2022: £96.5m), with organic growth of 1% despite the market seeing a 40% drop
in new mortgage approvals following the mini-budget in September 2022.

The total adviser number as at 30 June 2023 was down 6%, as expected, to
2,109(1) (31 December 2022: 2,254).  The average number of mainstream(2)
advisers during the period increased by 4% to 1,966 (H1 2022: 1,890), and on
an organic basis the average number of mainstream advisers reduced by 4% to
1,814 (H1 2022: 1,890), with a circa 5% increase in organic revenue per
adviser.

Due to the market turmoil that followed the mini-budget, we entered 2023 with
a lower than expected pipeline of written mortgages and new Appointed
Representative ("AR") firms.  In addition, our existing AR firms focused on
efficiency and paused recruitment, leading to a reduction in adviser
numbers.

UK gross new mortgage lending for the first five months of the year was 28%
lower than in the same period in 2022, as rising costs of living and higher
interest rates created further affordability constraints and reduced consumer
confidence. The residential purchase segment was down 30%, residential
re-mortgaging down 18% and buy-to-let down 46%. Re-financing (re-mortgaging
and product transfers combined) activity performed better overall as it was
bolstered by product transfers, with product transfer lending data, currently
only available for the first quarter of the year, showing an increase of 12%
for Q1 2023 compared to Q1 2022.

 UK Gross new mortgage lending for the five months to 31 May, £bn
                          2023  2022   % (+/-)
 Residential purchase     44.0  62.8   -30
 Residential re-mortgage  28.8  35.2   -18
 Buy-to-let               12.1  22.6   -46
 Other                    4.6   4.3    +7
 Total                    89.5  124.8  -28

Source: UK Finance

The strength of the MAB model has again ensured a significant outperformance
of the market and a continued growth in the share of gross new mortgage
lending to 8% for the five months ended 31 May 2023(3) (H1 2022: 6.8%),
despite the expected reduction in overall adviser numbers. The Group continues
to grow its market share due to the high quality of its AR firms and its
strong and resilient lead sources.

Current trading and outlook

The new mortgage approvals reported in Q2 2023 suggested that activity levels
had started to improve.  However, market conditions are now likely to toughen
further in H2 2023, driven by a continued rise in interest rates and fewer
consumers opting to purchase or move home at a time when mortgage rates are at
or close to peak levels in this current interest rate cycle.  However, we
expect re-financing will continue to perform strongly.

The underlying level of demand for home ownership and home moves remains
strong, and we are confident that once inflation is under control and mortgage
rates have peaked or start to fall back, we will see demand and activity
strengthen again.  It is too early to anticipate when that will happen, but
when it does MAB will have increased market share and will be in a very strong
position to capitalise on the recovery and the inevitable catch up in house
purchase transactions that will follow.

H1 has seen our new AR pipelines build back to pre-mini-budget levels and we
expect this strong activity to continue throughout H2.  Organic adviser
growth will return when the economic outlook is more certain, which will
enable our AR firms to plan with far more confidence.

Despite the strengthening H2 headwinds, trading is currently in line with
market expectations and the Group is well positioned to deliver further growth
as the market recovers.

Peter Brodnicki, CEO of MAB, commented:

"We had hoped to be in a period of interest rate stability as we entered Q3,
followed by a resumption in organic adviser growth in Q4. Instead, we find
ourselves in an environment of continuing interest rate rises, reduced
affordability, and cost of living increases, all of which are naturally
impacting consumer confidence. Despite strong underlying demand for property,
some buying decisions are understandably being delayed by our customers until
we have a more stable economic and interest rate environment.

"Despite the additional market pressure, I am delighted with how MAB is
performing and how our market share continues to grow. Re-mortgages and
increasing numbers of product transfers currently represent around 60% of our
written transaction volumes. This will deliver MAB a greater number of
re-financing opportunities in the medium term, with the Group's advisers
performing particularly strongly in this area.

"Despite the signs of a market recovery being further off than we expected
three months ago, business efficiency continues to increase, adviser
productivity has been maintained, and all strategic initiatives continue to
progress well.  The Group is well positioned to deliver further growth as the
market recovers."

Enquiries:

Mortgage Advice Bureau (Holdings) plc
 +44 (0)1332 525007

Peter Brodnicki, Chief Executive Officer

Ben Thompson, Deputy Chief Executive Officer

Lucy Tilley, Chief Financial Officer

 Nominated Adviser and Joint
 Broker:                                +44
 (0)20 7260 1000

Numis Securities
Limited

Stephen Westgate / Giles Rolls

Joint Broker:

Peel Hunt LLP

Andrew Buchanan / Mike
Burke
+44 (0) 20 7418 8900

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of
the European Union (Withdrawal) Act 2018 ("UK MAR").

1      Includes a total of 188 advisers as at 30 June 2023 who are either
directly authorised or later life advisers. For both directly authorised and
later life advisers the fees received by MAB represent the net income received
by MAB as there are no commission payouts made by MAB.

2      Excludes directly authorised advisers and later life advisers.

3      UK gross new mortgage lending values for June 2023 are not yet
available.

 

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