January’s figures suggest that packagers are returning to favour on the mortgage market.
When The Mortgage Alliance (TMA) questioned a group of directly authorised intermediaries (DMAs), they found that around half believed that there had been an increase in the number of lenders willing to use packagers’ services.
Rob Derry, Managing Director of Brunel Mortgages and Loans, said: “The last three years have been difficult but the professional, flexible and experienced packagers have survived. Brunel have been packaging secured finance for the last 25 years and brokers needn’t worry that we will steal their clients.
“We do not cross-sell any products, we don’t market to customers introduced and we don’t have a direct-to-customer arm that is competing with our customer, the broker. With more lenders flexing their criteria and being open to making lending decisions outside criteria, a packager with a good relationship with a range of lenders adds enormous value to the process.”
The survey also revealed that 41 per cent of respondents found the services offered by packagers relevant in the current market and helpful when placing a non-standard deal.
Broker Bob Havenhand, of south Yorkshire Property Consultants, said: “I think that they (packagers) can be extremely useful, particularly in the buy-to-let market where up to date information is essential”
While the interest in packagers seems to that of be reverting to pre-credit crunch days, the industry as a whole is non-recognizable and has changed significantly.
“I think the packaging days as we knew them ‘pre-credit crunch’ are long gone, with lenders fighting over themselves to have packagers distribute their specialist products, and paying extremely healthy commissions for doing so,” said Lucy Barrett, Director at W&B Mortgage Solutions Ltd.
” However, I do believe that lenders are seeing a value which can be added by this distribution channel again, and although the products look very different, and the way packagers operate has drastically changed, they have reinvented themselves to be able to work with lenders effectively in today’s market”
Phil Whitehouse, Head of TMA, said:Not everyone will be comfortable using packagers but what is clear is that there is still very much a place for packagers in the modern mortgage market as intermediaries are continuing to struggle placing the growing number of non-standard borrowers who are failing lenders strict credit scoring.
“There are still specialist lenders out there with an appetite to lend through specialist distributors who can really help with complex applications and clients with non-standard criteria. And it is up to mortgage clubs such as TMA to continue helping members to ensure their clients have access to all the available deals.”
This recent surge in interest for packagers does not mean that the road is onwards and upwards for packagers, who are painstakingly aware that the environment is still competitive and still capable of receding.
Lucy Barrett added: “Packagers need to be very on the ball when it comes to product knowledge, processing applications, and ability to market products effectively. Lenders have gone back to basics in evaluating the need for packages, rather than just taking more and more packagers on, paying away large commissions just to keep up in a very fluid market.”