By Christopher May, director of The Mortgage Times Group.
It’s official. 2006 has been the year of the packager. Rumours abounded in the weeks running up to ‘Mortgage-Day’ that regulation would severely damage the packager market, resulting in a decline and a severe downhill slide. Not only was this not the case, it has transpired that the reverse has occurred with many packaging organisations reporting huge growth figures, and some organisations being singled out as having distributions often larger than the lenders they package mortgage business for.
This success inevitably brings a higher level of competition in the market, and staying at the front of the pack requires innovative propositions suited precisely to the needs of the lender as well as the broker. Packagers are the key for a lot of lenders administration requirements and for many years have provided them with much needed distribution. Times are now changing and we are constantly seeing lenders encouraging brokers to do business directly with them.
This is understandable as with more and more lenders coming into the UK market business distribution is a vital component for sustained growth. I commend lenders who are innovative and have good on-line systems and service, but there also seems to be a quiet revolution happening among packagers who are implementing on-line services which are complex and very advanced.
These services can offer the broker flexibility in getting support from an independent packager. Although the words “independent” and “packager” seem to be used less nowadays in the same sentence, lenders have increasingly looked into buying in packagers to add value to their own proposition. Going forward, brokers should now be aware that packagers have an extremely crucial role to play in their business, and for the specialist market the service is second to none.
Brokers using packagers in the specialist market, and even when dealing with the mainstream lenders, prefer to pick up the phone and talk through a case with someone who can explain what options they have. Technology thus far prevents us from having in-depth conversations with sourcing systems. Packagers' on-line systems are now being streamlined to offer live decision-in-principle (DIP) facilities and quicker speed of service. Brokers are now beginning to get accustomed to having the choice of placing their clients with several lenders, as opposed to going to the lender directly and obtaining one.
Packagers are also starting to integrate back office systems with lenders. The benefit of this is to make the process quicker and normally we find that to complement this increase in speed packagers have the lenders own in-house underwriters on site. It is a fact that sometimes lenders simply cannot cope with heavy volumes of applications, and packagers offer a welcome escape in terms of outsourcing administration.
Lenders will always obviously look to expand regardless of their ability to cope with application volumes, and now realise that packagers are great at originating business. Many packagers, particularly operations that are privately owned, are quick on their feet to react to change and have not got masses of red tape to cut. More packagers than ever are gearing up to offer a wider choice as brokers begin to recognise that one-stop-shop that makes their life a whole lot easier is available with the minimum of fuss.
We have all seen what happens to lender service when too many applications flood in. When brokers use sourcing systems they can now submit electronic applications via MTE/Trigold with an application that is accepted by a whole host of lenders, and generic application forms can then be submitted via the packager. Packagers that have networks offer the broker massive support through dedicated business development managers. They also have compliance officers out in the field assisting brokers with compliance queries and helping them to maintain competency.
The future for packagers looks very bright indeed at present, with a host of brokers placing business because of the extra benefits involved. While lenders are looking to fine tune their own single lender cascading systems, packagers are development and implementing systems that can cascade across there entire panel, making the process far more streamlined and compliant.
I believe the market dictates what services it wants and it has given the packager community a big vote of confidence which has seen organisations such as The Mortgage Times Group expand and prosper in this market.
