Trading Update

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 2,109¹ (31 December 2022: 2,254).  The average number of mainstream² 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 2023³ (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                            [phone]

Peter Brodnicki, Chief Executive Officer

Ben Thompson, Deputy Chief Executive Officer

Lucy Tilley, Chief Financial Officer

Nominated Adviser and Joint Broker:                                [phone]

Numis Securities Limited                                                                             

Stephen Westgate / Giles Rolls

Joint Broker:

Peel Hunt LLP

Andrew Buchanan / Mike Burke                                            [phone]

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.

 

END