Freehold warns of packager cull
Paul Brett, spokesman for Freehold, explained lenders are maximising the value of each of their connections. The costs of maintaining relationships through BDM contacts as well as IT and marketing support are being scrutinised closely by all lenders, all of which pose a threat to packagers not producing sufficient volume.
He said: “Packagers which aren’t able to produce the targets set by lenders will find their packaging agreements will not be renewed. This is becoming a trend in 2006, which will threaten the future of more and more smaller packagers. Once a packager starts losing lenders, there is greater pressure on trying to keep brokers on board. After that it can be a slippery slope.”
Freehold, the representative association of regional mortgage distributors, is currently made up of 19 member companies which all have an equal share in the association. It is aiming to attract a maximum of 25 members to share the benefits of being part of a bigger group.
Hugh Dennis, managing director of Chapel House, commented: “There has never been more demand from brokers for the skills that good packagers provide. At the same time, the threat from lenders looking to concentrate their resources on larger producers means that those same packagers who provide a real personal service are going to find it difficult to cope unless they look at an association like Freehold.”
Dev Malle, director of sales at Pink Home Loans, said: “In principle it is right; lenders are undoubtedly looking at volume. But associations, like Freehold, have to prove to members it can maintain relationships with lenders which can be a tricky issue.”