Spain, France and imminent EU entrant, Bulgaria, will be the top three European countries for overseas mortgage distribution by 2020 according to a study by Alliance & Leicester Mortgages.

The Broker World in 2020 study reveals that two-thirds of brokers (68%) think they will do more business in the overseas mortgage market in the future. Nine out of ten (90%) of them think Europe will see the biggest impact and nearly half (45%) expect to expand into Europe by 2020.

Mehrdad Yousefi, Head of Intermediary Mortgages at Alliance & Leicester comments: "Our research shows that UK brokers view Europe as the up and coming battleground for the UK mortgage community. The majority of brokers see a lot of value and opportunity in the European market. Spain, France and Bulgaria look like being the hotspots of the future with Portugal, Italy and Germany not far behind.

Pursuing the European and international mortgage markets will prove important for brokers who are seeing an increasing number of UK residents wanting to buy second homes in established overseas property markets such as Spain and France."

Mehrdad Yousefi continued: "The appearance of Bulgaria as a booming property market is interesting as I would class this as an 'emerging' country, compared to the more established property markets of Spain and France. House prices remain relatively cheap for Brits, and joining the European Union should make the prospects for this area even more attractive. It is great to see that brokers want to provide choice for overseas homeowners as well as diversify their businesses."

When asked about expansion into the worldwide mortgage market, only one in seven (14%) were optimistic about operating outside Europe. These brokers cited the United States and Australia as the top two countries for distribution worldwide with Dubai, China and New Zealand the next most cited hotspots.

Top five countries for distribution in Europe according to The Broker World in 2020 study

Country	Percentage*
Spain	73%
France	61%
Bulgaria	25%
Portugal	18%
Italy	13%

* Please note, brokers were able to choose more than one answer

Top five countries for distribution outside Europe according to The Broker World in 2020 study

Country	Percentage*
USA	30%
Australia	17%
Dubai	7%
China	6%
New Zealand	6%

* Please note, brokers were able to choose more than one answer

What else does the future hold?

The research also reveals that brokers expect to form more strategic partnerships with lenders which will lead to more consolidation in the broker market and also to lower profitability for brokers by the year 2020.

Strategic partnerships

Brokers overwhelmingly believe lenders will form more strategic partnerships with major intermediaries. Over three quarters (78%) say they expect more and stronger relationships between lenders and brokers, where they will align their plans to grow their businesses together.

Consolidation

Moreover, brokers believe this will inevitably lead to greater consolidation in the broker market. Nearly four out of five brokers (79%) believe this to be true with just under half (47%) thinking this will be because of stronger alliances between brokers and lenders. Over half of these (53%) say the broker market will consolidate by the year 2020.

Profitability

However, the study also reveals that brokers feel they will be less profitable in the future. Two in five (41%) adopt a gloomy attitude and say the future will not be so profitable for them indicating that the costs associated with compliance and the long-term impact of M Day and regulation will drive returns down.

Only one in five (20%) remains optimistic and believes the future heralds more profit. These brokers say entry into wider markets, not just purely mortgages, and higher fee income will boost returns. Thirty-nine per cent of brokers remain on the fence and believe the broker market will retain more or less the same profitability levels in 2020 as today.

Mehrdad Yousefi said: "The lender/broker relationship is already a strong one in the UK mortgage market, and it comes as no surprise that brokers envisage this will only get stronger with more strategic partnerships in the future.

In an increasingly competitive market, the most successful brokers should in fact, see their earnings rise the more they adapt to the ever-changing and evolving market."

Research for The Broker World in 2020 study was undertaken for Alliance & Leicester Mortgages by The Survey Shop via telephone in August 2006 amongst a sample of 201 mortgage intermediaries.