CFI: Bridging


It’s important post MMR clients have access to sensibly priced by


George Patellis, CEO, Tiuta


it’s difficult to look past the potential impact of the mort- gage market review when evaluating the developments in any area of the market. the cmL has been very vocal in its criticism of the mmr and claims that if the FSa’s re- sponsible lending proposals had been in place since 2005, around 3.8 million “good” loans would potentially not have been granted. Following a detailed study,


the cmL has concluded that while fewer arrears and repos- sessions would have occurred, this effect would have been modest compared with the impact on large numbers of creditworthy borrowers. the cmL claims that only 5% of first-time buyers who would have been affected had any re- corded payment problems. in effect, this means that around 730,000 first-time buyers over the period between the sec- ond quarter of 2005 and the first quarter of 2009 – 95% of the first-time buyers who would have been denied their mortgage under the rules as proposed - experienced no payment difficulties, it claims.


Noteworthy figures Borrowers with impaired credit would also have been more affected than other bor- rowers, the cmL says, but at least with greater justification on the basis of subsequent loan performance. While 80% of impaired credit borrowers might not have been able to


get their mortgage under the FSa’s proposals, some 20% of these loans were in payment difficulties in 2009. these are fairly noteworthy


figures that are being talked about especially when looking forward to how much poten- tial business might be lost in the more mainstream market. they also highlight the op- portunities available for in- novative, well-funded short to medium term lenders and their intermediary partners. the key for such providers be- ing the flexibility possessed to tweak and adapt criteria and products to compensate for any short-falls in the whole- sale mortgage market.


Irresponsible lending of course the ultimate aim of the FSa is to establish a strong mortgage market where those who can afford mortgages are able to get them. the regula- tor has stated on a number of occasions that it is in the interests of all that it gets this right to ensure that both lend- ers and borrowers do not suf- fer from irresponsible lending. this is a fair comment and the right attitude but it’s also vital that borrowers with a good, if not quite squeaky clean, credit ratings have access to sensibly priced deals to match their borrowing requirements.


Bridging effect in terms of the wider picture there is every reason to sug- gest that mmr proposals are unlikely to hugely affect FSa- regulated bridging lenders significantly as the few that are, including tiuta, appear to uphold and maintain a sensi- ble approach to lending. even so, the mmr and any potential


“While 80% of impaired credit borrowers might not have been able to get their mortgage under the FSA’s propos- als, some 20% of these loans were in payment difficulties in 2009”


repercussions need to be fol- lowed closely by all sectors of the market and it seems like this is a hot topic which will continue for some time to come.


Good results in terms of current levels of activity in the bridging mar- ket, the past couple of months have seen most providers post some good results. it’s also evident that more short to medium term lenders are con- tinuing to eye the buy-to-let and commercial sectors with a greater appetite as conditions continue to illustrate some positivity. on the somewhat negative side, there are still brokers out there who are not realising the benefits attached to bridging finance.


Mortgage Expo of course, as providers, it is partly our job not only to sup- ply a range of productswith the right criteria but we also need to help brokers to


really understand who and how these particular products could benefit. Like many pro- viders we dedicate a great deal of resources to undertaking regular training, workshops and roundtable events. We are also on the verge of arguably the biggest event in the broker calendar which is the mort- gage Business expo. it has be- come evident in recent years that more and more niche sectors of the market have provided a larger proportion of exhibitors at the event. Sec- tors such as bridging, secured loans, general insurance, equi- ty release, debt solutions and the international markets, to name but a few, have provided an increased presence within the show to try and get closer to brokers who are looking to diversify even further.


Outside the box exploring any new area can initially be a difficult one for brokers and it is imperative that they fully realise the add- ed benefits that ‘new’ offer- ings can bring to their client base. in the current financial climate there has never been a greater need for brokers to look outside the box when it comes to diversifying their of- ferings. Fully evaluating the potential of these sectors is vital and this is where the true value of roadshows, exhibi- tions and trade events really come to the fore. So for brokers visiting the


expo there is certainly no harm in taking some time to speak to some short to me- dium term lenders about what benefits they may be able to provide for their clients and ultimately their business in general.


mortgage introducer NOVEMBER 2010 47


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