I underestimated the longevity and usefulness of packagers. I had thought that online technology and a willingness among lenders to deal direct with brokers would sound their death knell. But recent tactical plays by GMAC and Kensington provide vindication for packagers’ raison d’etre.Not all will survive once new entrants to the specialist lending arena begin to compress margins on certain product suites, such as near-prime. But most will continue to thrive and I believe that many are actually in ruder financial health than most mortgage networks are. They also have the capacity to absorb any partial erosion of their present operating margins. As for networks, I sense that their day of reckoning has arrived. This is a chronically over-populated sector which I believe has been wrong-footed by the fact that, post-regulation, many mortgage practitioners either remained or became directly authorised. As a result, the definitions of what constitutes a packager, network or mortgage club are becoming distinctly blurred. Many networks add real value for their members via product procurement, fee collection and compliance support services, but operating margins within smaller operators are skinny at best, not least because commission shares are weighted so heavily in favour of the AR. The new battleground being formed will see these networks facing-off with their arch-combatants, mortgage clubs – generally leaner businesses carrying modest overhead costs as they are not weighed down by regulation. But to some uninformed commentators they are still little more than ‘sticker clubs’. Again , Hamptons has little involvement with them, but after dealing with the likes of Legal and General and the omnipotent Premier Mortgage Services, I don’t begrudge them any of their case earnings. They are invariably providing access to a product or an underwriting concession which we ourselves could not ordinarily access. All three sectors will witness some consolidation over the coming year. But if I had to be a long-term investor in each, my order of preference would be; club, packager, network. And holdings in the latter would be pretty light.
Almost two-thirds of the UK population do not understand the rationale behind demutualisation and the negative effect this can have on investment performance, according to research by the Association of Mutual Insurers. Seventy per cent of the 1,013 adults surveyed are unable to give a satisfactory explanation of the differences between a mutual organisation and […]
The buy-to-let sector has experienced a healthy start to 2006, according to UCB Home Loans.It says growth has been experienced in London, partly due to the 2012 Olympics, an area that had previously been in decline.UCB adds that the previous 4 per cent nationwide decline in BTL transactions in the first half of 2005 has […]
Norwich Union has added 18 funds to its personal and group pensions.
Montpelier has grown its shareholding of Millfield from 10 per cent to 14.76 per cent, making it the second largest shareholder behind Amvescap with 21.5 per cent.
Welcome to the latest update for The Merchants Trust PLC from the Trust’s portfolio manager, Simon Gergel. Portfolio Review In February, the House of Commons passed a draft law to trigger article 50 of the Lisbon treaty for the UK to exit the EU. In corporate news, Warren Buffett backed Kraft Heinz in its takeover […]
News and expert analysis straight to your inboxSign up
Latest from Money Marketing
The Financial Ombudsman Service will be reviewed by an independent person following claims of poor staff training and alleged biases in its decisions that were exposed in a recent Channel 4 investigation. Treasury Committee chair Nicky Morgan wrote to FOS chief executive Caroline Wayman on 13 March asking for more information about the findings of […]
There are numerous trip hazards with carry forward but more clients will want to be looking at it Many believe the annual allowance will be fair game for the chancellor soon, as one of the least painful and least complex reductions in cost to the Treasury. As such, the need to contribute while clients can and […]
The world is a challenging place for a traditional one-man (or -woman) band Increased regulation and rising costs are leading to a growing number of mid-sized adviser firms. Sole trader and two-handed businesses are becoming rarer as changing rules and client demands present a greater challenge for smaller firms. Between compliance, technology and the implementation […]