CFI: News Review
Commercial market feeling more positive
by Lucy Barrett, director, Vantage Finance
Last year there were whis- pers of green shoots emerg- ing in the commercial mort- gage market, but after seven consecutive quarters of re- ported growth for commer- cial property, combined with rising rental values it is start- ing to feel like the market is moving further still towards recovery. during the eye of the finan-
cial storm we saw in excess of 40% stripped off the value of
commercial property, but we have seen a positive rebound from the lowest point in late 2008 to early 2009 which has led to an improvement in the commercial lending sector. there has also been increased appetite from investors looking to ex- pand their portfolios and push on with projects which have been in the pipeline but held back awaiting the right time to move them forward. Whiteaway Laidlaw Bank
launched its new proposition recently which gives investors more choice on repayment options in a market which has been very much restricted to
amortising loans, often over restrictive periods such as 15 or 20 years. it’s early days for the new offering, and i am sure it will evolve in response to mar- ket reaction to the products but i think it goes without saying that the launch of products from WLB has cre- ated an aura of positivity amongst commercial mort- gage brokers who have long awaited the return of what was commercial First to new loan origination. it was also refreshing to
see masthaven, the bridging finance provider, launch a product exclusively to nation- al association of commercial
Finance Brokers members this month for commercial loans. although there has been a lot of competition amongst bridging lenders of late there hasn’t been any- thing targeting commercial loans specifically, so it will be interesting to see if others fol- low suit and begin to look at their policy and pricing for commercial bridging prod- ucts which has been an area of caution for most. the nacFB has reported
an increase in lenders joining as patrons, or showing con- siderable interest which dem- onstrates a desire by lend- ers to tap into new forms of distribution.
Commercial lenders face up to launch challenges by Mark
Blackwell, managing director, xit2
Whiteaway Laidlaw Bank launched a new commercial proposition last month which is good news for brokers, especially given the issues commercial lenders face when coming to market. notwithstanding funding structures, asset mix and portfolio diversification, distribution strategy and a multitude of regulatory hurdles - assessing each se- curity against loan size, resale value, rental yield, property type and usage (as well as protecting against being the victim of a fraudulent ap- plication) - are challenges in their own right. the recovery, if indeed
there is actually a recovery, is only taking place inside the m25, and in reality is confined to very tight pockets in and around London, with specific areas such as the West end, the city, and ca- nary Wharf being the major beneficiaries. in the West end top com- mercial rents have reached £92.50 per sq ft, an increase of 19% from the same period last year. this has created two markets for commercial property: London prime and everything else. So geograph- ic focus is very important as the business strategy comes to life. new commercial lenders need to be careful to protect themselves from fraud. resi- dential mortgage fraud has risen 14% since the reces- sion. the commercial world is facing similar issues – if not on the same scale - and
50 mortgage introducer JUNE 2011
new lenders will need to put systems in place to manage fraud and ensure their books don’t end up as ridden with fraud as those of residential lenders. new commercial lenders are particularly vulnerable while they bed down their credit scoring, credit analysis, and ratio analysis. But even when they are in full swing, all of them depend on the financial information pro- vided by borrowers and if t he information is fraudulent, their analysis won’t be reli- able. Fraud damages any com-
pany’s reputation, market share, and share price but it also diverts management attention away from the core business. Balancing business growth against managing to limit over exposure to fraud is a challenge. the best way for new lenders to combat
that is to improve the quality of their third party oversight. that’s where problems can arise and they need to be confident in the quality of their panels from the start – their valuers, their convey- ancers, their brokers. this is all part of a wider issue though - getting the it right. this is where the new breed can steal a march on existing commercial lenders – many of which are using platforms that are decades old. the best new systems can provide lenders with management informa- tion that would make the biggest banks in the uK green with envy. Better information means better management of a business. But installing systems is a serious business and any new lender needs to appoint someone to be responsible for its delivery.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60