Almost three-quarters of intermediaries submit some or all of their mortgage business via packagers, the latest survey from the Intermediary Mortgage Lenders Association has revealed.
The association says an average of just over 12% of total mortgage business is submitted to packagers by intermediaries while more than 60% of intermediaries say they submit between 10% and 25% via packagers, and 6% submit more than 50% this way. A small minority (2%) put all their business through packagers.
Asked whether they thought business directed via packagers was likely to change over the next two years, almost a quarter of intermediaries say they expect it to increase while two-thirds see it remaining stable. Only a small minority, around 10%, expects business submitted via packagers to decline.
Intermediaries typically submit business through a small number of packagers, with almost a third (30%) making use of just one, 56% using two or three, and less than 5% using five or more.
But the survey also shows that, over time, technological developments could undermine the position of packagers.
IMLA says technology is becoming an increasingly important issue for intermediaries in their dealings with both packagers and lenders. Around 53% of respondents to the survey say technological enhancements by lenders – such as point-of-sale in principle decisions and offers – would lead them to place more business directly with the lender. The most commonly mentioned enhancements packagers could implement relate to improvements in online applications/facilities, processing and efficiency.
Godfrey Blight, director of IMLA, says: “Technology is a key differentiator in the future of our industry and one that IMLA is committed to supporting. Intermediaries say they are likely to do more business directly 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 might look contradictory, the message is loud and clear: packagers must embrace technology as lenders are doing.”
When asked what type of cases they tended to direct to packagers, 86% say they submit sub-prime mortgages via packagers, with smaller numbers submitting buy-to-let (45%) and self-certification (44%) cases.
More than a quarter of intermediaries say they have a better relationship with packagers than with lenders, although a larger number (60%) say there is no perceptible difference. A minority (14%) say their relationships with packagers are less good as they could not rely on them.