Packagers that take the pain now willwill win the long-term survival game

I agree with many of the points Rob Jupp raises in his recent letter regarding packagers (Mortgage Strategy February 25).

I am a victim of the recent twists and turns in the mortgage sector but I believe packagers will continue to have a place in the distribution chain.

That said, part of the survival game – and that’s what mortgage distribution is going to be – will be played out this year.

Keys to winning this game include taking immediate action to reduce the amount of money spent on things that are nice to have rather than must-haves. Packagers that have already taken action in this regard are well placed to survive.

It’s also becoming clear that lenders are not as safe as we used to think. Many new market entrants have already bitten the dust and now even balance sheet lenders are shedding jobs and cutting their mortgage volumes.

As this process continues, packagers will notice some significant changes in their lender partners. If lenders don’t want massive business volumes they won’t have to fall over themselves to pay the generous fees and marketing allowances of yesteryear.

Lenders are also considering exclusive products and having to look for best value in terms of getting their deals to market. So they are in the driving seat and I suspect this will remain the case for most of 2008.

Packagers that have invested seriously in technology will be among the survivors and Jupp’s firm is clearly in that category. But the technology race is still to be run to its finish and once again we will see some winners and many also-rans.

In the meantime, packagers that take the pain – and sadly that means more job losses and serious cost cutting in the next few months – are the ones that will take this industry to the next phase of its development.

Eddie Smith
Former managing director
By email