Their value has been questioned and their ability to survive once market conditions return to normal – whatever that is these days – has been doubted. But it is precisely because of difficult market conditions that packagers will survive and even thrive.
Don’t get me wrong, they can’t expect to carry on as before. None of us can. But packagers that reinvent their offerings and provide more rounded solutions will still be around when the market returns.
Lenders have been enduring plenty of pain and many continue to do so. Consolidation is inevitable as smaller struggling ones are swallowed up by stronger, capital-rich rivals. Nationwide’s take-over of the Derbyshire and the Cheshire is just the beginning.
Brokers must evolve to survive too. Those who do not work hard to retain clients, develop new skills and extend their expertise are in danger of being left behind. The market has changed and smart brokers need to change with it. We’re all in the same boat.
But the concept of packaging should become more viable in difficult market conditions. When brokers can’t place cases packagers should be able to. Those that embrace reinvention should continue to provide a valuable service to the lending community.
The margins packagers once saw have disappeared along with the sub-prime market. But many high street brokers still require help placing complex or large cases, particularly in today’s conditions.
Packagers’ services must be extended to difficult buy-to-let cases and commercial debt so that comprehensive solutions are available.
As lenders re-enter the market when conditions improve, packagers will be more necessary than ever to deliver controlled quality distribution. They will be able to give specialist lenders lacking access to funds distribution without the need for sales and marketing divisions.
When the sub-prime market returns, albeit repriced to match customers’ risk profiles, packagers can be of particular assistance to lenders that decide to dip a toe in the adverse waters. They can find the controlled distribution they’ll need from packagers.
So packagers that continue to evolve and expand the facilities they offer will thrive. Taking advantage of technological advances will be crucial as it will make their products and services more accessible. Packagers that have reinvented themselves and possess sustainable models will survive. Nothing else will do.