CFI: News Review
Appetite for short-term lending shows no sign of abating
although excel Securi-
by
Guy Garrard,
head of business
development, Tiuta
Like the majority of the mort- gage market, specialist pro- viders continue to experience their fair share of ups and downs amidst some remain- ing economic and political uncertainty. in recent weeks the bridging and commercial sectors have seen no exception to the rule, as illustrated by a new entrant and a couple of unfortunate exits. Within the last month or so we have seen mathon Finance placed into administration, an announce- ment which was swiftly fol- lowed by administrators being appointed at excel Securities.
as i’m sure existing and potential providers work- ing in this sector realise, funding issues remain a problem - but fortunately to a slightly lesser extent than the rest of the lending in- dustry. Because bridging is short-term, lending loans can be redeemed quick- ly which has resulted in funding problems not being quite so extreme as other niche markets. But just to illustrate
how difficult the current fi- nancial climate remains f or providers, intermediaries and other small businesses, research from uSwitch- forBusiness.com says that whilst there is evidence the uK is slowly emerging from
ties had not been active in the market in recent months, the news proves that de- spite some specialist lenders, maintaining a good appetite for short-term lending, many have certainly not been im- mune to the recent funding and credit problems experi- enced in the more mainstream markets. indeed, lenders oper- ating in any market take no joy in such announcements, far from it. as with all niche sector
firms, the majority operating within their specialist area work hard to educate consum- ers and intermediaries on the benefits of such offerings and any negativity can reflect badly on the sector as a whole. com- petition remains an important driver for both providers and for the customer whether it be
UK needs more lending to small businesses
the recession, the green- shoots of recovery are failing to reach Britain’s small busi- nesses. despite gdP figures showing a return to positive growth, 63% of Smes are finding trading conditions tough - 5% more than at the end of 2009 - and 71% have seen little or no improve- ment in the trading environ- ment compared with a year ago. it’s inevitable for the whole
of financial services that the next couple of months will see change in some form or another but just what this will entail is hard to say. Let’s just hope that we continue to move forward rather and that the positives continue to out- weigh any negatives.
40 mortgage introducer MAY 2010
for the man in the street or for brokers. However, this is not to say
that the bridging finance sec- tor is not still ripe with oppor- tunity. the appetite for short term lending shows no sign of abating and this demand will continue as long as providers can offer choice and flexibility in order to meet the needs of applicants where more main-
stream lending institutions cannot or will not lend. a care- ful mix of caution, innovation and diversification remain key factors in the continued suc- cess of the market for the year ahead. Short term finance specialists operating from a strong financial and regula- tory base will be in a prime position to take full advantage of any opportunities that arise.
Drawbridge launch is positive news
It was good to see Drawbridge Finance announcing its official launch via a selected number of key partners. After originally opening its doors for business in April 2009 it has now selected 35 exclusive partners to distribute its products. As we have increasingly come to realise, it is this controlled distribution that has quite possibly become the key element in the modern mortgage market.
The importance of how, when and where products are distributed is not a factor to be underestimated but amidst current financial curtailments choosing the right distribution strategy is even more vital than ever. When launching any new product there are inevitably a host of willing parties chomping at the bit to get a slice of the action and this is certainly not going to change. From a lending perspective obviously things are a little bit different. Relationships and trust play a major part in how lenders go about setting up their distribution channels. Volumes can be a problem – depending upon the size of the tranche – as can levels of service, and I’m sure that Drawbridge has chosen well in order to help the bridging sector move forward. We’re now well into Spring and indeed the second quarter of 2010 so it will be interesting to see how these departures and potential new entrants have affected lending volumes and activity within the bridging sector. Quarter four 2009 figures from the Association of Short Term Lenders revealed that whilst the number of bridging loan applications fell slightly in the final quarter of 2009, the number of completed loans saw the biggest increase of the year. During this period Tiuta experience a marked rise in the take up of our bridging offering as end of year business flooded through the doors. We even experienced record levels for December 2009 smashing our previous best monthly bridging completion figures by 28%.
Looking back over the first quarter of 2010 and it’s fair to say it has built in momentum since an understandably sluggish January. With both February and March being good months these have led to some renewed but cautious optimism for the upcoming months as well the rest of the year.
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