The figures, revealed in a speech by Executive Chairman of GMAC-RFC Stephen Knight, show that from the year prior to GMAC-RFC implementing this strategy (1999) to today, the UK mortgage market for gross advances has grown by about 130%. GMAC-RFC's growth over the same period has been ten times that number at 1300%.
GMAC-RFC's strategy is to use its skills in product design, distribution management, funding and securitisation to grow significant mortgage volume. The assets created are then sold in pools to investors and other lenders. By focussing on the origination of mortgage assets and their subsequent on-sale, GMAC-RFC avoids competition in cross-selling and customer retention and uses the resultant low costs and efficiencies to create highly competitive products.
In his speech at the CML conference, Stephen Knight said: "Creating a liquid portfolio sale market in the UK was not easy but with 25 portfolios sold in the last 24 months we believe we're getting there! Everybody benefits from portfolio trading. The initial customer terms, which were competitive enough to win the business in the first place, are honoured. A flow of new funding is created. And purchasing lenders get a new distribution alternative of completed, paying loans."
Stephen Knight also discussed how he believes the intermediary sector will look post M-day. He does not believe that the total amount of mortgages placed by this sector will decline but that fewer firms will deliver the volume. "We have developed a range of distribution management techniques," said Knight who also went on to predict that technology will be the key to the future of the market but that the regulators must help the industry to continue to progress in this way.
