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Brokers say packagers will rise to the direct challenge

Despite research predicting threequarters of future growth in the sub-prime market will be through the direct-to-broker channel, lenders say packagers will still have a place in the mortgage market.

Recent research by GE Money Home Lending reveals that by 2009 three-quarters of growth in the sub-prime market will be via the direct-to-broker channel.

It also found that by 2010, brokers anticipate that sub-prime will account for nearly a quarter of their business.

Bob Sturges, spokesman for Money Partners, voices the thoughts of many in the industry when considering whether the growing strength of the direct-to-broker channel will be detrimental to packagers.

He says: ” Going through the direct-to-broker channel cuts out one link in the chain and is a way of reducing proc fees for lenders.

“But the packaging sector has always been good at reinventing itself and rising to challenges so I do not see this move towards the broker channel as a nail in the coffin for packagers. They have re-established themselves in the market.”

Despite having a presence in both the packager and broker channels, GEMHL has recently got itself more deeply involved in the direct-to-broker market by launching a range through Mortgage Intelligence.

The lender says it intends to develop this channel throughout 2007 by working with networks and mortgage clubs.

Duncan Berry, director of mortgage sales at GEMHL, says: “As we continue to develop our flourishing packager relationships we are also keen to ensure that our compelling products become more widely accessible to the general broker market.”

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