1. THE MORTGAGE MARKET John Malone Managing Director PMS®

2. 2008 Gross lending £265bn (est), down £100bn on 2007, equates to £500 million less “proc fee” income – not including any associated income Gross lending £265bn (est), down £100bn on 2007, equates to £500 million less “proc fee” income – not including any associated income Specialist sector virtually non existent this year Specialist sector virtually non existent this year Innovation / flexibility / no new entrants – opens door wider for High St, Prime, less innovative approach Innovation / flexibility / no new entrants – opens door wider for High St, Prime, less innovative approach

3. Major Impact on Intermediary Sector Effects Reduced Distribution Reduced Distribution Tranche Management Tranche Management Packager market virtually wiped out Packager market virtually wiped out Less Intermediaries (Regulatory/Business) Less Intermediaries (Regulatory/Business) Products re-structured Products re-structured Income Income

4. 2009 - What will the “norm” look like? 2002/7 – Abnormal 2002/7 – Abnormal Pricing for volume, not risk Pricing for volume, not risk “Cheap” money fuelling the property market “Cheap” money fuelling the property market The speculators dream! The speculators dream!

5. Pricing for risk Pricing for risk More cautious approach More cautious approach Property throughout UK likely to fall a further 10%-20% (average), putting more pressure on the remortgage market Property throughout UK likely to fall a further 10%-20% (average), putting more pressure on the remortgage market Gross lending £250bn? Gross lending £250bn? This will be the Norm!!!

6. Advice even more important Advice even more important Clients moving from 2 yr fixes to longer term mortgages – 5/10 yr Clients moving from 2 yr fixes to longer term mortgages – 5/10 yr Purchase market 600 -700 thousand sales Purchase market 600 -700 thousand sales Adding value to lenders (savings products) Adding value to lenders (savings products) This will be the Norm!!!

7. Existing clients on SVR still unlikely to remortgage as lack of liquidity will persist throughout 2009 Existing clients on SVR still unlikely to remortgage as lack of liquidity will persist throughout 2009 Availability of funds will elevate “advice” from intermediaries, leading to more “fee” charging (also in keeping with the RDR) Availability of funds will elevate “advice” from intermediaries, leading to more “fee” charging (also in keeping with the RDR) Re-evaluating a club / facilitators worth, to both lender partners and supporting intermediaries Re-evaluating a club / facilitators worth, to both lender partners and supporting intermediaries This will be the Norm!!!

8. First 3 months of 2008, Lenders / Intermediaries / Government / Regulators, were confused – no clear message. First 3 months of 2008, Lenders / Intermediaries / Government / Regulators, were confused – no clear message. Going into 2009 the industry now understands more the issues and implications for all parts of the market, enabling a clearer message to clients and potential borrowers Going into 2009 the industry now understands more the issues and implications for all parts of the market, enabling a clearer message to clients and potential borrowers Conclusion