Speaking at the Mortgage Business Expo London, Personal Touch Packaging managing director Rob Jupp said the last couple of months had been “horrible” but highlighted five reasons why he thinks packagers will survive: the importance of multi-lender cascading; experience and expertise; technology and ‘safe sourcing’; the power of distribution; and the fact that the non-conforming sector will continue to grow.
“There are people out there that think packagers assist them, help them and add value to their business,” he said. “Distribution is now the most important thing.”
Jupp said that evolving, using technology and being entrepreneurial would save packagers, although there were likely to be some casualties, redundancies and consolidations.
Tracing the problems back to the US in 2006, Jupp said 17 consecutive interest rate rises in a row and the fact that US lenders lent money to people with no jobs and no way of paying it back started the problems the market is currently witnessing.
He highlighted the 9th August this year – when US bank BNP became the first victim of the credit crunch - as a key date when “things went horribly wrong”. In the UK Infinity Mortgages withdrew its products on August 20th and on September 4th LIBOR hit a nine year high. Just nine days later on September 13th Northern Rock asked the Bank of England for emergency funding and “the man on the street started to understand the credit crunch”. The following week on September 17th, Victoria Mortgages went into administration.
Jupp added: “So where are we now? Lenders are pricing for risk and there is caution about high LTVs. Sub-prime of over 80 per cent LTV has gone and there is continued volatility with the re-pricing of products. September and October were hellish and we saw 600 products re-priced in an eight-week period as well as redundancies and reviewed business models. For a time the outlook looked pretty bloody bleak.”
Speaking in the same seminar which looked at the developing role and responsibility of packagers, Vic Jannels, Chairman of All Types of Mortgages, said the packaging sector had “been in the death throes before but come through surprisingly unscathed”, adding that technology and developing a seamless process were key to packagers’ survival.
