Countrywide grows mortgage distribution but profits plunge

Countrywide has grown its mortgage distribution on the back of a digital roll-out despite a squeeze on the UK housing market. The group’s latest

Countrywide has grown its mortgage distribution on the back of a digital roll-out despite a squeeze on the UK housing market.

The group’s latest half-year results show 43,461 mortgages were arranged in the first six months of 2017 – up from 42,944 for the same period in 2016.

The value of lending also climbed from £7.4bn to £7.9bn.

But operating profits dropped sharply, from £28.6m to £6.5m, while revenue was slashed from £370.3m to £333m.

Countrywide’s market share dipped from 5.1 per cent to 4.9 per cent amid a 7 per cent drop in UK housing transactions.

The group launched its telephony mortgage channel at the start of the year and now has a 60-strong team in place.

It also rolled out a digital offering to help its 560 mortgage advisers provide a more efficient service for mortgage and remortgage customers.

Half of the firm’s branches now offer customers the choice to transact digitally at a fixed cost but with the option of upgrading to the full service proposition.

However, the group said 95 per cent of customers still choose to take advantage of the services it offers in branch, meaning they want a combination of digital capability and local market expertise.

Chief executive Alison Platt said: “As anticipated, the first half of 2017 was tough for the group compared to the same period last year given the high levels of housing transactions brought forward in time as a result of the stamp duty changes and the European Union referendum.

“We continue to serve our customers better, and this manifests strongly in our ability to win repeat business in lettings. 

“Our digital proposition in sales is also proving to be an important element in bringing choice and attracting more applicants and vendors to our brands. At the same time our investment in a telephony sales channel in financial services is helping to grow our share of the mortgage market.”

Ray Boulger, senior technical manager at London-based John Charcol, said Countrywide’s drop in market share could reflect greater competition from online agents such as Purple Bricks.

He said: “Although the drop in market share may not seem very big, it is a 4 per cent reduction and not insignificant.

“Unless there is a regional factor there, the most obvious conclusion is the digital players are now beginning to take market share from the established players.

“There was a view that because it is a ‘people business’ you do need people involved in all aspects of the business. I was not convinced online agents would be able to get a big market share, but it looks like they are now getting a market share large enough that agents like Countrywide will feel under some pressure.”

Mr Boulger added one line of response from the established players could be to reduce commission fees, which would have an impact on margins.

simon.allin@ft.com

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