Donna Wells, Director at F4B
Historically speaking, August can be a month when many sectors across the mortgage market take a collective breather on the back of the extended school break and the holiday season really kicking into gear. Of course, this year and last, we’ve seen wholesale changes in how, where and when people can head overseas and this continues to encourage more people to holiday within the UK or embark on ‘staycations’. Factors which might encourage people to check their emails a little more than they otherwise might. This means that a greater number of out of office messages are being followed up, and activity across the specialist lending sectors continues at a greater pace than many August’s of times gone by.
Despite the inevitable lull from the extreme levels of property purchases seen over the past 12 months, activity levels remain robust. This is especially the case when it comes to people looking to redevelop or refurbish property and there is still rising interest in semi-commercial cases. When it comes to tracking demand and trends across various sectors, data from Knowledge Bank represents good source of information.
Bridging related searches
In it’s latest report, it was suggested that brokers are searching for ‘maximum loan to value (LTV)’ in their droves with ‘maximum LTV’ either the most, or second most-searched across the second charge, equity release, self-build, bridging and commercial mortgage markets. Focusing on bridging finance, the report highlighted that the presence of ‘adverse credit’ in the bridging sector may be of concern to some, as the sector has had some issues in the past providing finance to those who cannot get a loan or mortgage elsewhere. Alongside searches for ‘maximum loan to value’, brokers in the bridging sector have also been searching for the ‘minimum loan amount’. This may be due to some using bridging loans for smaller projects, like renovating a bathroom or light refurbishments to an investment property.
These results help outline just some of the variations in demand from intermediaries for bridging finance and a small sample of the number of property-related scenarios where this type of loan may be applicable, appropriate and responsible continues to grow. From a lending perspective, this has become an increasingly competitive environment. This increased competition is not only helping to sharpen rates but to also drive up professional standards. This improved development and delivery of bridging finance is making a real difference to a wider variety of borrowers, especially due to some implications raised over the course of the pandemic. However, with more lenders entering this market, extending their propositions and making criteria/policy tweaks it can be difficult for intermediaries who are not vastly experienced in this product form to keep up.
Across the specialist mortgage market, each lender has their own quirks, appetite, capacity and attitudes to certain transactions. Service and underwriting values also differ and the strength of relationships can make a real difference in getting a case over the line, particularly when time is of the essence – which is often of primary importance when it comes to securing a bridging loan.
The importance of a packager
This is where packagers play such an integral role and a strong lending panel sits at the heart of these offerings. Building a comprehensive lending panel is an ongoing task as new entrants will always emerge. Before adding these, any good packager will ensure that these lenders demonstrate the highest service standards, have competitive product ranges, flexible criteria, incorporate good quality support networks and are backed by robust funding lines.
Focusing on existing lenders on the panel, it’s important to constantly revisit these relationships to ensure they remain beneficial to all parties in this chain. From the other direction, we – as an industry – need to constantly look for ways to better educate and support intermediary partners/introducers in identifying the circumstances, property types and clientele who may benefit from a short-term facility or if their needs might be classed as being a little ‘different’.
There is no such thing as a one-size-fits-all bridging loan. A fact which underlines the value of aligning with a real expert in their field and, when doing so, advisers can rest easy in the knowledge that all their clients specialist needs are being taken care of.