Research by IMLA showed over 70% of intermediaries use packagers for part of their mortgage business and expect to grow the amount of business they submit through this channel. It stated packagers are clearly filling a necessary function for the mortgage industry.
IMLA’s recent survey of more than 300 intermediaries showed that while they generally value the service and relationship offered by packagers, over time technological developments could undermine the position of packagers.
More than three-quarters (77%) of intermediaries use packagers first and foremost for the support they offer in handling difficult cases, according to the IMLA survey. Other commonly mentioned reasons were that they sourced several lenders under one roof (61%), had wide knowledge of product lenders (58%), had access to exclusive products (47%) and had underwriters on site (45%).
Godfrey Blight, director of IMLA, said: “It’s no great surprise that intermediaries say that the most important benefit in using a packager is to help support tricky cases, as well as the access they get to the range of products of a number of lenders, sometimes on an exclusive basis.”
When asked what type of cases they tended to direct to packagers, 86% indicated that they submit non-conforming mortgages via packagers, with somewhat smaller proportions saying that they submit buy-to-let (45%) and self-certification (44%) cases.
Many intermediaries clearly value the relationship they have with packagers, based on personal service and approachability. More than a quarter of intermediaries reported that they have a better relationship with packagers than with lenders, although a larger number (60%) said there was no perceptible difference. A small minority of intermediaries (14%) took the opposite view and said that their relationships with packagers were less good as they ‘could not rely on them’ or that they offered ‘poor service’.
Blight said: “Service and relationship are very important factors, and for the most part packagers score very well in this regard. However, in a minority of cases intermediaries are less than totally satisfied, so there is no room for complacency.”
Even so, technology is an increasingly issue for intermediaries and their dealings with both packagers and lenders. A majority (53%) of respondents to IMLA’s survey indicated that technological enhancements by lenders (such as point-of-sale in principle decisions and offers) would lead them to place more business direct with the lender. When asked what enhancements packagers could implement, the most commonly mentioned ones were related to improvements in on-line applications/facilities, processing and efficiency.
Blight commented: “Technology is a key differentiator in the future of our industry and one that IMLA is committed to supporting. Intermediaries say that they are likely to do more business direct with lenders as technology enhancements are implemented, but they also expect to grow the business they direct through packagers by 1.3% over the next two years. While this may appear somewhat contradictory, the message does come across loud and clear: packagers must embrace technology just as lenders are doing.”
