in my opinion


Lenders not pretenders needed


Precise Mortgages will stay on its toes as competition increases


by Alan Cleary, managing director, Precise Mortgages


Precise Mortgages’ launch into the short term lending market has been exceptionally busy and whilst we still have a lot of work to do I would say we are on track to meet our objectives. Clearly, some of our competitors


have been rattled by our entry but most brokers and intermediaries I have spoken to have welcomed us and are happy to see more competition between providers. The bridging and short-term lending markets have seen significant change over the last few years in much the same way as the residential home owner market. Both have contracted considerably as a consequence of funding constraints and both markets have moved much more towards prime customers.


The banking crisis has effectively


rewritten the rule book for many lenders that have remained in the space and no longer is short-term lending an option of last resort. The market is now very much


following the trends set by the buy- to-let market where we have seen a significant move away from amateur landlords towards professionals and


32 BrIdgIng InTrodUCEr july 2011


much of the finance provided by us and other lenders now is for the completion of development projects. The buy-to-let market was decimated from a peak of £44bn gross lending in 2007 to just £8bn in 2009. But the difficulties for many people in getting a mortgage on the high street has led to a significant and most likely sustainable increase in rental yields and many investors have spotted the opportunity that this will bring. This year is likely to see buy-to-let lending increase to around £12bn and I forecast that over the next three to five years this will increase to around £20bn annually. This period of growth will fuel an


expansion of the short-term market as investors and developers fill the gap left by the lack of new homes being built and the state being unable to cope with social housing demands.


The macro economics of the


UK, Europe and the US will also play its part in the development of short-term lending because the uncertainty and negative impacts of a West that is deleveraging its massive public debt mountains will discourage a generation of people from becoming homeowners, at least for the time being. The demands on the private rental sector look set to last for at least the medium term. Therefore, the short- term market needs more lenders not only to increase competition but also to increase funding so that this


potential demand can be met. Precise Mortgages has made no secret of its desire to lend a significant amount of money in this space and more importantly we have the ability to lend, the market needs lenders not pretenders.


Doing the right things The debate about regulation in the mortgage market has been raging since 2001 and I can still remember the significant number of meetings I had to attend when I was director of Halifax Intermediaries in preparation for M-day in 2004. Since then the regulatory landscape has only got busier and more uncertain and this rapidly changing environment is going to have far reaching impacts on short- term lending. I am well versed on regulatory matters as I need to be for the regulated side of Precise Mortgages and I am also fortunate enough to be a director of the Intermediary Mortgage Lenders Association which includes regular meetings with regulators and the Treasury. European mortgage directives are quite likely to force a much bigger proportion of short-term lending into the regulatory framework and everyone in this market should be keeping a keen eye open for any developments. That being said we do not need regulation to tell us that we should be doing the right things and Precise Mortgages has a very


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